--- title: Homebuyers Are Gaining More Purchasing Power as Mortgage Rates Fall description: A buyer with a $3,000 monthly budget can now afford a $468,000 home, about $22,000 more than in June. Mortgage rates are behind the shift. authors: - name: Liliana Hall role: Reporter url: https://money.com/author/liliana-hall/ bio: Liliana Hall joined Money in 2025. She is an Austin-based reporter for Money, where she covers a range of topics, including financial news, policy, banking, investing, passive income, financial planning and student loan debt. education: University of Texas at Austin at_money_since: 2025 articles: 134 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Retirement - Shopping - Taxes social: - https://x.com/lilihallllllll - https://www.linkedin.com/in/liliana-hall/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2025-09-15T15:34:33.000Z' modified: '2025-09-15T15:34:33.000Z' section: Housing tags: - News word_count: 554 canonical: https://money.com/homebuyers-gain-purchasing-power/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo collage of a young happy couple, holding keys, with a house in the background](https://img.money.com/2025/09/News-Homebuyers-Purchasing-Power.jpg) Purchasing power — essentially, the value of a buyer’s budget in today’s market — is climbing fast for homebuyers. A borrower with a $3,000 monthly budget can now afford a $468,000 home, about $22,000 more than in June, according to real estate brokerage [Redfin](https://www.redfin.com/news/purchasing-power-improves-rates-drop/). The jump is tied to mortgage rates, which [dropped](https://www.mortgagenewsdaily.com/mortgage-rates/mnd) to 6.29% on Friday — the lowest in nearly a year. That’s down from 6.9% on June 5, when the same buyer’s budget only stretched to about $446,000. Last week’s dip in rates alone gave buyers roughly $7,500 more room in their budgets. For a sense of what this means in real dollars, consider the monthly payment on a typical U.S. home: The median-priced home, roughly $444,000, now carries a monthly payment of about $2,480 with the average rate of 6.29%. Three months ago, with rates at 6.9%, the same home would have cost $2,624 a month — about $150 more. Still, lower [mortgage rates](https://money.com/current-mortgage-rates/) haven’t solved the bigger challenge that home prices remain elevated, limiting how far new purchasing power can stretch. Nationwide, home prices are up 1.2% from last summer. But in some cities, prices are climbing even faster. In Milwaukee, the median sale price jumped a record 20% year over year in February — the sharpest increase among the nation’s 50 largest metropolitan areas. Detroit followed with a 12.5% gain alongside double-digit increases in markers like New York's Nassau County, California's San Jose and Cleveland. Even with the recent boost, homebuyers still have less purchasing power than a few years ago. Since 2019, a typical buyer has lost about $27,000 in spending power, according to Realtor.com. That's yet another reminder that affordability is still strained compared to prepandemic levels. ## How a Fed rate cut may affect homebuyers Mortgage rates fell sharply from 6.85% a month ago to 6.29% last week after a weaker-than-expected [August jobs report](https://money.com/fed-rate-cut-september-experts-predict/), which experts say points to a probable 25-basis-point rate cut at the Federal Reserve's meeting Tuesday and Wednesday. The Department of Labor reported that the economy added 22,000 jobs last month, well below forecasts, while unemployment rose to 4.3% — all factors that have pushed mortgage rates down. Still, even if the Fed lowers its benchmark rate, mortgage rates may not drop much further. That’s because lenders have already adjusted in anticipation of a quarter-point cut, leaving today’s 6.29% average close to the lowest buyers are likely to see for now. “The mortgage market is already pricing in the Fed’s expected interest-rate cut, and rates are unlikely to fall more,” said Chen Zhao, Redfin’s head of economics research, in a news release. Still, that makes this a rare opening. “There have been very few opportunities to lock in a rate as low as 6.3% in the last three years — and now buyers have one,” Zhao said. But the question remains whether buyers will jump in. [More homes are for sale](https://money.com/more-homes-for-sale-since-pandemic/) than at any point since the pandemic, but inventory is still limited in many markets. Increased demand could push prices higher, potentially eroding some of the recent gains in affordability. ## Buy your home with more convenience and less hassle ![View Rates](https://s3.consumersadvocate.org/prd/image/image/38130/medium_29a2a129-cf1d-4fcb-a92d-901b0c9bf0f6.webp) Our Partner [View Rates](https://money.com/go/713fd0e10fcf?bidid=4111664803&pmeta=p129-c488-u36862&ptid=670493586&ptoken=4c6523153edc1ecda95e6919804f7521) ![View Rates](https://s3.consumersadvocate.org/prd/image/image/39711/medium_85521de9-b6c5-4b35-a129-169c217d0287.webp) Our Partner [View Rates](https://money.com/go/95bb04306a74?bidid=4111664805&pmeta=p129-c488-u36862&ptid=670493586&ptoken=faa47dfcba0673dc49052e77a0317811) ![View Rates](https://s3.consumersadvocate.org/prd/image/image/34120/medium_4ba40e39-00f6-4f3e-9a12-67943aa4166f.webp) Our Partner [View Rates](https://money.com/go/c1a5984556c3?bidid=4111664804&pmeta=p129-c488-u36862&ptid=670493586&ptoken=5cec94199be68603da07f66d0a1cf764) ![](https://s3.consumersadvocate.org/prd/image/image/26681/medium_57f09f10-efb8-487d-a73e-5f7d605144eb.png) Imagine finally owning your dream home — Rocket Mortgage (NMLS #3030) can help! [View Rates](https://money.com/pr/t39f99e0e0ab?ap_referrer=%2Fhomebuyers-gain-purchasing-power%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/homebuyers-gain-purchasing-power/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Housing", "item": "https://money.com/housing/" }, { "@type": "ListItem", "position": 3, "name": "Home Buying", "item": "https://money.com/home-buying/" }, { "@type": "ListItem", "position": 4, "name": "Homebuyers Are Gaining More Purchasing Power as Mortgage Rates Fall" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/homebuyers-gain-purchasing-power/#webpage", "url": "https://money.com/homebuyers-gain-purchasing-power/", "name": "Homebuyers Are Gaining More Purchasing Power as Mortgage Rates Fall", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-09-15T15:34:33.000Z", "mainEntity": { "@id": "https://money.com/homebuyers-gain-purchasing-power/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/homebuyers-gain-purchasing-power/#breadcrumb" }, "dateModified": "2025-09-15T15:34:33.000Z" }, { "@type": "NewsArticle", "headline": "Homebuyers Are Gaining More Purchasing Power as Mortgage Rates Fall", "articleSection": "Housing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/09/News-Homebuyers-Purchasing-Power.jpg", "width": 2560, "height": 1707, "caption": "News-Homebuyers-Purchasing-Power" } ], "author": [ { "@type": "Person", "name": "Liliana Hall", "url": "https://money.com/author/liliana-hall/", "@id": "https://money.com/author/liliana-hall/#author", "description": "Liliana Hall joined Money in 2025. 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