Based on the latest Zillow market report for January2024, monthly costs for a new mortgage are falling, inventory is trending back toward normal, and price cuts are uncharacteristically common.
“Despite high-cost headwinds, buyers have a few things to be thankful for in today’s market,” said Zillow Chief Economist Skylar Olsen. “Home prices are cooling down faster than normal as new listings from existing owners and total inventory slowly recover. Mortgage rates are still above 7%, but price cuts are surprisingly common, and mortgage costs eased a bit. These factors favor buyers who are reluctant to pause their home search in the off-season.”–USA.
Mortgage costs tick down, along with rates, home values
Buyers facing extreme cost challenges received a bit of relief as monthly mortgage costs on a typical home purchase fell 1.5% from October to November. That’s down from a peak in October, when costs were up 9% annually and almost 120% above pre-pandemic levels. Affordability improved, too, with mortgage payments2, as a share of household income, falling from October’s record high of 40.4% to 38.6% in November.
The monthly decline in costs was primarily driven by falling mortgage rates. But rates still higher than 7% also helped push down home values. The Zillow Home Value Index declined 0.4% from October to November, falling slightly faster than what was previously considered “normal” for this time of year. Still, the typical national home value is up 2.8% from last year and now stands at $347,415.
Annual growth is strongest in Hartford (11.3%), Milwaukee (8.5%) and San Diego (7.6%) — places where demand has overwhelmed supply. The largest annual drops are in New Orleans (-8.9%), Austin (-8.2%) and San Antonio (-3%), with those last two metros serving as examples of how a surge in new construction is helping rebalance markets.
