Homebuyers Gain $16,000 in Purchasing Power As Mortgage Rates Dip to Lowest Level in 3 Months

The daily average mortgage rate dipped to 6.67% to start July, down from roughly 7.1% five weeks earlier. On-the-fence house hunters should consider jumping in while they have more purchasing power–and more negotiating power. 

A homebuyer on a $3,000 monthly budget has gained $16,000 in purchasing power in the last five weeks. That buyer can afford a $455,000 home with a 6.65% mortgage rate, roughly the daily average on July 1. That’s the lowest daily average mortgage rate since early April.

Declining rates are giving homebuyers some wiggle room in their budgets. Rates fell from a recent peak of 7.08% in late May to 6.67% at the start of July. On a $3,000 monthly budget, a buyer could have purchased a $439,000 home with a 7.08% rate. 

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To look at affordability another way, the monthly mortgage payment on the median-priced U.S. home, which goes for roughly $441,000, is $2,705 with today’s average rate. Five weeks ago, when rates were sitting above 7%, the payment would have been $2,795, nearly $100 more. 

Mortgage rates are still twice as high as they were in 2020 and 2021 during the pandemic homebuying boom. But for homebuyers who have been waiting months for rates to come down, the increase in purchasing power is notable. 

“Homebuyers have a window of opportunity today–and it could be short,” said Redfin Chief Economist Daryl Fairweather. “We expect mortgage rates to remain in the high-6% or low-7% range for the rest of the year, as the Fed has made it clear it doesn’t plan to cut interest rates. That makes now a good time for house hunters to lock in mortgage rates, as they’re unlikely to dip much lower in the near term–and they could bounce back up. Economic uncertainty surrounding President Trump’s signature policy bill, which is moving through Congress now, could drive rates up.”

Fairweather also noted that sellers have a window of opportunity. Declining mortgage rates may entice house hunters to re-engage in their search, so now could be a good time for sellers to drop their asking price or talk to their agent about other ways to attract buyers. 

There are a few other factors that make it a good time to consider buying. There are hundreds of thousands more home sellers than buyers in today’s market, giving buyers negotiating power. Redfin agents report that sellers in many parts of the country are willing to lower their asking price to get a deal done; many homes are selling for below their asking price. Nearly half of U.S. home sellers are giving concessions to buyers, just shy of the highest level on record.

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