Home Affordability Hits a Three-Year High

According to a Zillow analysis, home buying became more affordable in October. The boost in affordability is due mostly to unseasonably high price cuts and lower mortgage interest rates. National wage growth, which outpaced changes in home values, also contributed to the improvements in affordability. Meanwhile, the dip in mortgage rates continued to draw sellers and buyers back to the market during what is usually a slow season for home sales. 

“The reaction to lower rates shows that buyers are ready to make offers when affordability improves,” said Kara Ng, Zillow senior economist. “While fall has been a sneaky good market for buyers and sellers who stuck it out past the busy season, winter is coming, and may bring rate volatility with it. This warmup is not guaranteed to last.”

Mortgage rates will largely influence how long these conditions last. But  movers are going into the end of 2025 with less competition for homes in most markets, potentially more options and more time to consider those options. So if you’re undeterred by the prospect of eating leftover turkey atop moving boxes, the slower holiday season could be a good time to update your homebuying budgets and explore financing.

What to know if you’re planning to shop or list

How has affordability improved?

 The combination of rising incomes, steady or declining home values and lower interest rates means that homes are the most affordable they’ve been in the past three years. 

As mortgage rates edged down, so, too, did mortgage payments. The typical monthly mortgage payment in October for a buyer who put 20% down was $1,778, about 2% less than a year ago. Meanwhile, median household income outpaced changes in home values, rising 0.4% in October while housing costs fell by 0.9%  On a year-over-year basis, median income is up 4% while the typical monthly cost for a new homebuyer dropped by 1.8%.

To see how lower interest rates affect your home-buying budget, check out Zillow’s BuyAbility℠ tool. It gives you a personalized estimate of what you can afford based on the latest mortgage rates and your financial situation.

Is there less home buyer competition in the fall?

The biggest benefits to buying in the Fall tend to be a slower pace for shopping, price cuts on homes that have lingered on the market, and less competition from other buyers. 

The market is balanced on the national scale, but 19 major markets now favor buyers, three more than in September and up from nine last October.

How much has inventory improved?

Total inventory has risen 12.8% since last year and is 17.3% lower than 2018-2019 averages for this time of year. While not back to ‘normal,’ this is the smallest supply deficit since the pandemic began in March 2020 and a big improvement over the 51% shortfall seen in February 2022. 

New listings edged up by 0.3% from September, which is unusual for this time of year. You can stay on top of fresh choices as they become available by setting alerts on your Zillow app.

Metros where home values are declining

Home values have declined from a year ago in 24 of the nation’s 50 major metros.

10 metros with the biggest declines in home values:

Metros where home values are increasing

In other markets, home values are still rising.

10 metros with the fastest growth in home values:

Regional highlights

Hartford, CT

Hartford is the hottest sellers market in the country right now, with buyer demand outpacing the limited supply of homes for sale. The reasons: A healthy job market, not enough home construction to keep up with demand, and lower home values compared to pricey metros like New York and Boston that are within commuting distance.

Typical home value: $379,550, up 4.4% from a year ago

Typical monthly mortgage payment (with 20% down on a 30-year fixed-rate mortgage): $1,870

Speed of sales: 8 days from list to pending

Cleveland, OH

Home prices in Cleveland, one of the most affordable major markets in the country, gained 4.5% over the past year, the largest annual price gains among the nation’s top 50 markets. Cleveland Magazine attributes the fast rise to returning residents and job growth. 

Typical home value: $241,368

Typical monthly mortgage payment (with 20% down on a 30-year fixed-rate mortgage): $1,182

Speed of Sales: 12 days from list to pending

Closing the deal before the holidays

Selling a home this November

With the weather turning, sellers should give special attention to marketing their properties online to give buyers the best possible feel for the home. For the broadest reach, sellers should list their homes on the Multiple Listing Service, where research shows homes sell faster and for more money.

Sellers and buyers in most markets should be prepared to negotiate concessions on price, closing costs and mortgage rate buydowns, especially in the growing number of markets that favor buyers. Talk with your agent to either craft an offer or set a listing price that reflects conditions in your local market. 

Buying a home this November

As the year comes to a close, sellers are hoping to make a deal before the holidays, and have been cutting prices to attract buyers still in the hunt. Still, one in four homes for sale sold above list price in September, a sign that demand remains strong in many markets even as the national picture softens. 

If you’re getting close to buying, be especially mindful of your credit score, which fluctuates depending on the amount of credit you’re using, the amount of debt you’re carrying and your payment history, among other things. Protecting and improving your credit score can help you qualify for a mortgage and get a better interest rate.