Key Takeaways
- The latest findings from Realtor.com show that median home prices fell from July to August, and are also lower than they were a year ago.
- 30-year mortgage rates have likewise been dropping—falling 40 basis points from July to August and 84 points since last August.
- Put the two together and you get more affordable monthly payments. In fact, the principal-and-interest payment on an average loan fell to $2,150 in August—a savings of $132 from July’s $2,282 payment.
- Compared to August a year ago, when the average payment was $2,372, the typical monthly payment is now $222 cheaper.
- Though lenders’ rates are determined by a web of market factors, next week’s expected Fed rate cut could push mortgage rates—and monthly payments—even lower.
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Median House Prices Have Dropped Again
For a second consecutive month, the median home price in America has dropped. According to Realtor.com’s latest monthly report on the U.S. home buying market, August’s median price was $429,990. That’s down almost $8,000 from July’s $437,450 average and is more than $15,000 lower than the June median of $445,000.
Also worth comparing are August vs. August figures since home buying shows some seasonality. With higher and lower activity in different months of the year, comparing prices in the same calendar month eliminates the seasonality effect.
Looking back at August 2023, the median home price was $435,495. Compared to the August 2024 median of $429,990, the reduction year-over-year is about $5,500.
Mortgage Rates Have Also Fallen
An even bigger affordability impact on home buyers comes from the significant reduction in mortgage rates we’ve seen over the last several months. At the start of May, the average 30-year mortgage rate was 7.33% for home shoppers with a 20% down payment and a credit score of 680–739. But by late August, the low had slipped to 6.25%. That’s more than a full percentage point of decline across the summer months.
The Typical Monthly Payment Is Now Lower
Lower home prices and mortgage rates lead to more affordable monthly payments for home buyers. To provide a sense of how much relief buyers are feeling so far, we calculated typical principal-and-interest payments based on the median home price for each given month and the average 30-year mortgage rate in that month.
What you’ll owe every month for your home also needs to include homeowner’s insurance and property taxes. Many homeowners have this bundled right into their mortgage payment. But since insurance rates and taxes vary widely across the country, our monthly payment calculations here address just the mortgage’s principal-and-interest payment.
Comparing August to July, the average mortgage rate fell 41 basis points, from 6.80% to 6.39%. Combined with a reduced median home price in August, the typical principal-and-interest payment in August would be down to $2,150—or $132 cheaper per month than the typical July payment of $2,282.
The savings are more significant when compared to what a typical monthly payment would have been last August. At a higher median home price in August 2023, as well as a higher mortgage rate of 7.23%, the average monthly payment one year ago would have been $2,372. Compared to this August’s average monthly payment of $2,150, that’s a $222 per month reduction.
Will Mortgages Keep Getting Cheaper?
Mortgage rates are fairly difficult to predict. But they may keep drifting lower for some time. One reason is that the Federal Reserve is poised to begin what’s expected to be a series of interest-rate cuts starting Sept. 18. The federal funds rate is sitting at its highest level in 23 years, thanks to an aggressive rate-hike campaign by the Fed to tamp down post-pandemic inflation. However, with inflation now cooling, the central bank is ready to start bringing its benchmark rate down from this peak level.
The federal funds rate doesn’t by itself impact mortgage rates—in fact, the two can move in opposite directions. However, it is one component in a complex interaction of macroeconomic and industry factors that pushes mortgage rates up and down.
Anticipation of the Fed’s upcoming rate cuts—which could continue into 2025 and even 2026—has already had some impact. At the end of August, the 30-year fixed-rate mortgage average was 6.33%. Now, just a week and a half into September, it’s already fallen to 6.07%.
The Best Week to Buy a House Is Coming Up
A positive seasonal impact is likely to emerge in the coming weeks. According to Realtor.com analysis, historical trends show that home prices will fall and there will be more options available during the week of Sept. 29–Oct. 5.
How We Track Mortgage Rates
The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2024. Use is subject to the Zillow Terms of Use.