When it comes to buying a house, affordability continues to slowly improve.
U.S. households that have a median income — an estimated $86,300 — and enough money for a 20% down payment can now afford a $331,483 home, up $30,302 from $301,181 a year ago, according to a new report from Zillow. By “afford,” Zillow means that the monthly mortgage payment, including insurance and property taxes, would be under 30% of a household’s income.
“A $30,000 increase in buying power can open up a different neighborhood, bigger home or a home with fewer compromises,” the report says.
The improvement is at least partly due to interest rates that have come down slowly. The average rate on a fixed 30-year mortgage was 5.99% as of Feb. 27 but has since ticked up to 6.14%, according to Mortgage News Daily. A year ago, it was 6.79%.
For mortgages, even rates that are 0.5 percentage point lower can make a difference, said Kara Ng, senior economist at Zillow and author of the report.
