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Investing.com -- The daily average mortgage rate dropped to 6.57% on Monday, marking the lowest level in 10 months, according to a new report from Redfin (NASDAQ:RDFN).
This rate decrease has significantly improved purchasing power for homebuyers. A person with a $3,000 monthly budget can now afford a $458,750 home, compared to the $439,000 home they could have purchased in May when rates peaked at 7.08% - representing a $20,000 increase in buying capacity.
For the median-priced U.S. home of approximately $447,000, the monthly mortgage payment is now $2,862, over $100 less than the $2,983 payment that would have been required in mid-May when rates exceeded 7%.
The mortgage rate decline followed a weaker-than-expected July jobs report released over the weekend. With fewer jobs added than anticipated and a rise in the unemployment rate, market expectations for a Federal Reserve interest rate cut in September have increased.
"This dip in mortgage rates gives house hunters a window of opportunity to buy before summer ends," said Daryl Fairweather, Redfin’s chief economist. "While housing costs are still fairly high, the recent decline in rates boosts purchasing power and improves overall homebuying conditions. Combined with the surplus of homes for sale on the market, serious buyers may want to jump in sooner rather than later."
The current market presents potential advantages for buyers, with hundreds of thousands more sellers than buyers creating opportunities to negotiate lower prices and request concessions. However, this imbalance is beginning to narrow as new listings decline, with many potential sellers choosing to retain their properties rather than sell in a buyer-favorable market.
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