Over the last few years, many homebuyers have struggled to make the finances add up. Home prices went way up, and mortgage rates climbed as well. Because of that, a lot of people decided to put their plans on hold since it just didn’t seem doable. Maybe you were one of them.

Here’s some good news: if you’ve been holding off, now might be a better time to get back in. This fall, home affordability is starting to look up.

According to the latest data from Redfin, the average monthly mortgage payment has dropped and is now roughly $290 less than it was a few months ago (see graph below).

Here’s the reason behind this: the cost of buying a home basically boils down to three key factors.

• Mortgage rates

• Home prices

• Your wages

At this point, all three factors are starting to improve for you. That doesn’t mean buying a home at today’s rates and prices is suddenly easy, but it does make things a bit less difficult.

1. Mortgage Rates

Mortgage rates have dropped since earlier this year. Back in May, they were around 7%, but now they’ve fallen to about 6.3% (see graph below).

It might not seem like a huge deal, but it actually matters. Even a small dip in interest rates can affect your monthly payment down the road. For example, with a $400K mortgage, if rates go from 7% to 6.3%, you'd save about $190 a month just on the difference in rates.

For many, that's made buying a home feel within reach once more. As Joel Kan, VP and Deputy Chief Economist at the Mortgage Bankers Association (MBA), pointed out on September 10th:

““The downward rate movement spurred the strongest week of borrower demand since 2022 . . . Purchase applications increased to the highest level since July and continued to run more than 20 percent ahead of last year’s pace.”
”

— Joel Kan, VP and Deputy Chief Economist at the Mortgage Bankers Association (MBA)

2. Home Prices

After years of home prices climbing quickly, the pace of growth has now eased. Odeta Kushi, Deputy Chief Economist at First American, explains it this way:

““National home price growth remains positive, but muted — low single digits — and we expect this trend to continue in the second half of the year.”
”

— Odeta Kushi, Deputy Chief Economist at First American

For buyers, this is really good news. When prices level off, it’s simpler to figure out your budget. Plus, in certain areas, prices have actually gone down a bit. If you’re looking in one of those markets, you might find a home that’s more affordable than you thought.

3. Wages

Wages are rising by nearly 4% each year, according to the Bureau of Labor Statistics. Lawrence Yun, the Chief Economist at NAR, points out that this increase is especially significant in today’s market.

““Wage growth is now comfortably outpacing home price growth, and buyers have more choices.”
”

— Lawrence Yun, Chief Economist at NAR

Put simply, paychecks are increasing a bit quicker than home prices at the moment, making buying a home a little easier on the wallet. The gap isn’t huge, but in a market like this, every little bit helps.

What This Means for You

With lower interest rates, slower home price increases, and stronger wages, this fall could be the perfect time for the numbers to finally line up in your favor.

Buying a home is still a bit pricey, but it’s gotten a bit easier on your budget compared to a few months ago. In fact, Redfin data shows that the typical monthly mortgage payment is about $290 less than it was earlier this year.

Bottom Line

Have you been thinking about whether it might be a good idea to revisit the idea of buying?

Let’s take a look at the numbers together. We can review your budget, check for any updates, and decide if this fall is the right moment to stop just looking and start making a move.