Homebuyers faced diminishing buying power over the last couple of years as climbing mortgage rates limited how much house they could afford for a given monthly payment. Rates hit a multi-decade peak of 7.79% in October 2023, and hit a more recent peak of 7.22% in May 2024. However, rates have started to trend lower and dropped to 6.2% last week, the lowest level since February 2023. This 1+ percentage point improvement compared to recent peaks has dramatically improved buying power across the U.S., further bolstered by easing prices in some areas.
At the national level, the monthly payment for a median-priced home was roughly $2,100, assuming a 20% down-payment and today’s 6.2% mortgage rate. Taking into account both home price and mortgage rate shifts this is a $300 improvement compared to May and a $340 improvement compared to October 2023. Put another way, a buyer who budgeted to buy the typical home in 2023 now has an extra $70,000 in home purchasing power for the same monthly cost. The savings are even larger in higher-priced metros as the shift in mortgage rates goes even further dollar-wise.
Metros with Biggest Improvement in Buying Power
The country’s highest priced metros have benefitted the most, in terms of dollar amount, from falling mortgage rates. Lower mortgage rates meant that today’s buyers in San Jose can afford a home priced $240,600 more than they would have gotten in October 2023 for the same monthly payment. Put differently, in October 2023, a $8,000 monthly payment would have been necessary to afford a median-price ($1.4M) home. Today, a $8,000 payment at a 6.2% mortgage rate could afford a $1.6M home, an increase of $240,600 in buying power in San Jose.
| Metro | Aug 2024 Med. List Price | Aug 2024 Mo. Pmt | May 2024 Mo. Pmt | Oct 2023 Mo. Pmt | Buying Power vs Oct 2023 |
| San Jose-Sunnyvale-Santa Clara, CA | $1,399,000 | $6,900 | $8,000 | $7,900 | $240,600 |
| Los Angeles-Long Beach-Anaheim, CA | $1,190,000 | $5,800 | $6,800 | $6,700 | $201,900 |
| San Francisco-Oakland-Berkeley, CA | $969,000 | $4,700 | $5,700 | $6,300 | $191,300 |
| Oxnard-Thousand Oaks-Ventura, CA | $1,050,000 | $5,100 | $6,500 | $6,000 | $182,900 |
| San Diego-Chula Vista-Carlsbad, CA | $999,000 | $4,900 | $5,800 | $5,700 | $174,100 |
| Bridgeport-Stamford-Norwalk, CT | $800,000 | $3,900 | $5,800 | $5,100 | $154,900 |
| Boston-Cambridge-Newton, MA-NH | $834,500 | $4,100 | $4,900 | $4,800 | $145,900 |
| Urban Honolulu, HI | $725,000 | $3,600 | $4,000 | $4,600 | $139,200 |
| Seattle-Tacoma-Bellevue, WA | $775,000 | $3,800 | $4,200 | $4,600 | $138,000 |
| New York-Newark-Jersey City, NY-NJ-PA | $750,000 | $3,700 | $4,300 | $4,200 | $127,100 |
Five of the ten metros where buying power has improved the most are in California. Home prices have softened over the last 10 months in some of these metros, but have climbed in others, impacting how far a housing payment can go. The popular Northeast locales of Bridgeport-Stamford-Norwalk, CT and Boston-Cambridge-Newton, MA-NH have also seen impressive improvement in affordability due to easing mortgage rates.
Future Buying Power Improvements
We expect mortgage rates to continue to ease through the rest of this year and into next year, due in part to the Fed’s impending rate cuts. If mortgage rates were to fall to 6% (-0.2 percentage points), the typical U.S. buyer could see a $9,000 increase in buying power. If rates fell to 5.5%, the typical buyer would see a $34,000 increase in buying power relative to the August median listing price. Once again, the metros that stand to see the largest dollar increase in buying power are the country’s highest-priced areas. The San Jose metro area had a median listing price of $1.4M in August, the highest in the country. If mortgage rates were to fall to 5.5%, 0.7 percentage points lower than today, buyers in San Jose would see a $110,000 increase in buying power. That is to say that a buyer who budgeted for today’s median-priced home in the area ($1.4M) would be able to afford a home $110,000 more expensive with the same monthly payment if rates were to fall to 5.5%.
| Metro | Aug 2024 Med. List Price | Aug 2024 Mo. Pmy | 6% Rate Mo. Pmt Change | 5.5% Rate Mo. Pmt Change | 6% Addt’l Buying Power | 5.5% Addt’l Buying Power |
| San Jose-Sunnyvale-Santa Clara, CA | $1,399,000 | $6,900 | -$200 | -$300 | $30,100 | $110,100 |
| Los Angeles-Long Beach-Anaheim, CA | $1,190,000 | $5,800 | -$100 | -$300 | $25,600 | $93,600 |
| Oxnard-Thousand Oaks-Ventura, CA | $1,050,000 | $5,100 | -$100 | -$200 | $22,600 | $82,600 |
| San Diego-Chula Vista-Carlsbad, CA | $999,000 | $4,900 | -$100 | -$300 | $21,500 | $78,600 |
| San Francisco-Oakland-Berkeley, CA | $969,000 | $4,700 | -$100 | -$200 | $20,900 | $76,300 |
| Boston-Cambridge-Newton, MA-NH | $834,500 | $4,100 | -$100 | -$200 | $18,000 | $65,700 |
| Bridgeport-Stamford-Norwalk, CT | $800,000 | $3,900 | -$100 | -$200 | $17,200 | $63,000 |
| Seattle-Tacoma-Bellevue, WA | $775,000 | $3,800 | -$100 | -$200 | $16,700 | $61,000 |
| New York-Newark-Jersey City, NY-NJ-PA | $750,000 | $3,700 | -$100 | -$200 | $16,200 | $59,000 |
| Urban Honolulu, HI | $725,000 | $3,600 | -$100 | -$200 | $15,600 | $57,100 |
Note: Analyzed 100 largest U.S. metros. All monthly payments calculated assuming a 20% down-payment, excluding tax and insurance.
50 Largest U.S. Metro Buying Power Improvement:
| Metro | Aug 2024 Med. List Price | Aug 2024 Mo. Pmt | 6% Rate Mo. Pmt Change | 5.5% Rate Mo. Pmt Change | Today Buying Power vs Oct 2023 | 5.5% Buying Power vs Today |
| USA | $429,900 | $2,100 | -$44 | -$154 | $74,000 | $33,800 |
| New York-Newark-Jersey City, NY-NJ-PA | $750,000 | $3,700 | -$78 | -$268 | $127,100 | $59,000 |
| Los Angeles-Long Beach-Anaheim, CA | $1,190,000 | $5,800 | -$123 | -$425 | $201,900 | $93,600 |
| Chicago-Naperville-Elgin, IL-IN-WI | $385,000 | $1,900 | -$40 | -$138 | $64,500 | $30,300 |
| Dallas-Fort Worth-Arlington, TX | $444,990 | $2,200 | -$46 | -$159 | $78,200 | $35,000 |
| Houston-The Woodlands-Sugar Land, TX | $375,000 | $1,800 | -$39 | -$134 | $64,300 | $29,500 |
| Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | $382,000 | $1,900 | -$39 | -$137 | $61,000 | $30,100 |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | $599,900 | $2,900 | -$62 | -$214 | $104,500 | $47,200 |
| Miami-Fort Lauderdale-Pompano Beach, FL | $530,000 | $2,600 | -$55 | -$189 | $104,300 | $41,700 |
| Atlanta-Sandy Springs-Alpharetta, GA | $415,000 | $2,000 | -$43 | -$148 | $74,000 | $32,700 |
| Boston-Cambridge-Newton, MA-NH | $834,500 | $4,100 | -$86 | -$298 | $145,900 | $65,700 |
| Phoenix-Mesa-Chandler, AZ | $515,000 | $2,500 | -$53 | -$184 | $92,300 | $40,500 |
| Detroit-Warren-Dearborn, MI | $279,900 | $1,400 | -$29 | -$100 | $43,900 | $22,000 |
| San Francisco-Oakland-Berkeley, CA | $969,000 | $4,700 | -$100 | -$346 | $191,300 | $76,300 |
| Seattle-Tacoma-Bellevue, WA | $775,000 | $3,800 | -$80 | -$277 | $138,000 | $61,000 |
| Riverside-San Bernardino-Ontario, CA | $599,000 | $2,900 | -$62 | -$214 | $101,100 | $47,100 |
| Minneapolis-St. Paul-Bloomington, MN-WI | $439,990 | $2,200 | -$45 | -$157 | $75,200 | $34,600 |
| Tampa-St. Petersburg-Clearwater, FL | $415,000 | $2,000 | -$43 | -$148 | $74,900 | $32,700 |
| Denver-Aurora-Lakewood, CO | $620,000 | $3,000 | -$64 | -$222 | $110,600 | $48,800 |
| San Diego-Chula Vista-Carlsbad, CA | $999,000 | $4,900 | -$103 | -$357 | $174,100 | $78,600 |
| St. Louis, MO-IL | $301,900 | $1,500 | -$31 | -$108 | $48,300 | $23,800 |
| Baltimore-Columbia-Towson, MD | $370,900 | $1,800 | -$38 | -$133 | $64,000 | $29,200 |
| Charlotte-Concord-Gastonia, NC-SC | $435,000 | $2,100 | -$45 | -$155 | $73,300 | $34,200 |
| Orlando-Kissimmee-Sanford, FL | $435,000 | $2,100 | -$45 | -$155 | $78,400 | $34,200 |
| Pittsburgh, PA | $245,000 | $1,200 | -$25 | -$88 | $43,000 | $19,300 |
| San Antonio-New Braunfels, TX | $342,500 | $1,700 | -$35 | -$122 | $60,500 | $27,000 |
| Portland-Vancouver-Hillsboro, OR-WA | $615,000 | $3,000 | -$64 | -$220 | $108,000 | $48,400 |
| Austin-Round Rock-Georgetown, TX | $525,000 | $2,600 | -$54 | -$188 | $95,800 | $41,300 |
| Cincinnati, OH-KY-IN | $349,900 | $1,700 | -$36 | -$125 | $62,100 | $27,500 |
| Las Vegas-Henderson-Paradise, NV | $480,000 | $2,400 | -$50 | -$172 | $82,800 | $37,800 |
| Kansas City, MO-KS | $398,050 | $2,000 | -$41 | -$142 | $71,900 | $31,300 |
| Cleveland-Elyria, OH | $269,900 | $1,300 | -$28 | -$96 | $41,500 | $21,200 |
| Sacramento-Roseville-Folsom, CA | $640,000 | $3,100 | -$66 | -$229 | $113,100 | $50,400 |
| Columbus, OH | $384,900 | $1,900 | -$40 | -$138 | $63,800 | $30,300 |
| Indianapolis-Carmel-Anderson, IN | $330,000 | $1,600 | -$34 | -$118 | $55,700 | $26,000 |
| Nashville-Davidson–Murfreesboro–Franklin, TN | $550,000 | $2,700 | -$57 | -$197 | $99,900 | $43,300 |
| Virginia Beach-Norfolk-Newport News, VA-NC | $392,800 | $1,900 | -$41 | -$140 | $65,200 | $30,900 |
| Providence-Warwick, RI-MA | $573,700 | $2,800 | -$59 | -$205 | $94,000 | $45,100 |
| Jacksonville, FL | $409,850 | $2,000 | -$42 | -$146 | $74,000 | $32,300 |
| San Jose-Sunnyvale-Santa Clara, CA | $1,399,000 | $6,900 | -$145 | -$500 | $240,600 | $110,100 |
| Milwaukee-Waukesha, WI | $399,000 | $2,000 | -$41 | -$143 | $59,200 | $31,400 |
| Raleigh-Cary, NC | $454,900 | $2,200 | -$47 | -$163 | $79,700 | $35,800 |
| Oklahoma City, OK | $315,000 | $1,500 | -$33 | -$113 | $58,300 | $24,800 |
| Richmond, VA | $449,955 | $2,200 | -$47 | -$161 | $75,800 | $35,400 |
| Louisville/Jefferson County, KY-IN | $324,195 | $1,600 | -$34 | -$116 | $53,200 | $25,500 |
| Memphis, TN-MS-AR | $339,000 | $1,700 | -$35 | -$121 | $55,500 | $26,700 |
| New Orleans-Metairie, LA | $325,000 | $1,600 | -$34 | -$116 | $58,300 | $25,600 |
| Buffalo-Cheektowaga, NY | $279,900 | $1,400 | -$29 | -$100 | $44,400 | $22,000 |
| Hartford-East Hartford-Middletown, CT | $415,000 | $2,000 | -$43 | -$148 | $69,700 | $32,700 |
| Rochester, NY | $284,900 | $1,400 | -$29 | -$102 | $43,500 | $22,400 |
| Birmingham-Hoover, AL | $304,875 | $1,500 | -$32 | -$109 | $51,400 | $24,000 |