Interest rate drops have made August the most affordable month since February, as home price growth cooled to a 12-month low, according to the September 2024 ICE Mortgage Monitor Report. Declining mortgage rates have brought home affordability to its best level since February and boosted refinance incentive for many recent-vintage mortgages. With 30-year conforming rates down 60 bps from just over 7% in May, the principal and interest payment on the average-priced home purchase is $145 less per month than just three months ago.

The share of income needed to make payments on that home (34.3%) is still 10 pp above its 30-year average and ICE Market Trends data shows recent record highs in down payments and credit scores Spurred by rate declines, purchase loan demand had two of its best weeks since March, but remains noticeably below the levels seen earlier this year and in 2023 when rates were at comparable levels. The ICE Home Price Index for July showed the annual rate of home price growth slipping to +3.6% from +4.1% in June, marking the slowest pace in 12 months on rising inventory and still-soft demand.

Source: Morning Star