Home affordability issues have kept many Americans from buying a house in 2026. For many prospective buyers, monthly mortgage payments would simply be too high to live comfortably.
High home prices and soaring mortgage rates are the two main culprits behind high monthly mortgage payments.
However, a Redfin report found that the median monthly mortgage payment has dropped to a six-week low. The median is now $2,755, down from the peak of $2,811 in early October.
Just as home prices and mortgage rates drove monthly payments higher, they’re now helping bring them down.
Falling mortgage rates and home prices are easing monthly payments
The national median home-sale price is now $388,613, according to the Redfin Housing Market Tracker. That’s a 0.9% year-over-year decrease and the fourth consecutive week of price declines.
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Mortgage rates have also been dropping in recent weeks. Redfin’s data is from the four-week period ending Nov. 8, when Freddie Mac’s national 30-year fixed mortgage rate was 7.18%. That marked the third straight week of rate decreases after rates sat at 7.40% in early and mid-October, according to Freddie Mac data.
Home sale prices may be down compared with this time last year, but mortgage rates are not. Despite weeks of decreases, the Nov. 8 rate of 7.18% was still significantly higher than the 6.22% Freddie Mac rate a year earlier — a difference of 0.96 percentage points.
So, while overall home affordability has improved over the last six weeks, it is still worse than a year ago.
Despite declining home prices and mortgage rates, potential homebuyers still face affordability issues.
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Monthly mortgage payments could keep decreasing
Home affordability may not be where we want it yet, but it could continue to improve. As of Nov. 12, the average 30-year mortgage rate had dropped again, this time from 7.18% to 7.11%.
“Mortgage rates dropped to their lowest level in seven weeks, a welcome development that gives borrowers greater flexibility as they navigate the current housing market,” said Sam Khater, chief economist for Freddie Mac.
Continued declines in mortgage rates and home-sale prices could make housing more affordable. And current market conditions suggest buyers may have some leverage when negotiating home prices.
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Homebuyers generally have more negotiating power in buyer’s markets than in seller’s markets, which can put downward pressure on home prices. Another Redfin report found that only three of the 50 largest U.S. metros are seller’s markets right now (Nassau County, N.Y.; Newark, N.J.; and Montgomery County, Pa.).
“That’s tied for the fewest in records dating back to 2016, matching April 2020, when the pandemic froze the housing market,” data journalist Dana Anderson wrote for Redfin.
Meanwhile, 41 of the largest 50 metros are buyer’s markets, and the remaining six are balanced markets.
With so many markets favoring buyers, sellers may have to be more flexible with their asking prices. That could help keep home-price growth in check and provide some relief for prospective buyers.
Declining home-sale prices and mortgage rates are welcome developments for prospective buyers. However, the recent improvements haven’t been enough to restore affordability to its level a year ago.
It’s rare for home sale prices to decrease for an extended period, though. These declines may be helpful now, but the key to ongoing affordability is for mortgage rates to steadily fall.
If we can get mortgage rates back down below 7% and even 6.5%, monthly mortgage payments could be more manageable for Americans.
Related: Ramit Sethi tackles dilemma facing homeowners with low rates
