Raleigh ranks second in largest increase of affordable homes over the past year: Zillow

RALEIGH, N.C. (WNCN/NewsNation) — According to a recent report by Zillow, after mortgage rates fell to a two-year low in September, the number of affordable homes jumped, in some cases by double, in October.

Zillow found that a typical U.S. household would have been able to afford nearly 28% of homes for sale in September — the highest share since February 2023, but can vary from market to market.

Affordable home listings increase was highest in Austin, going up double in the past year from 13% of listings to 26%. Raleigh was right behind with the number of affordable home listings increasing from 28% to 40%.

San Antonio was third on the list, with affordable listings going from 21% in Oct. 2023 to 33% in Oct. 2024. Phoenix and Minneapolis have both seen major gains as well.

Currently, mortgage rates are nearly 7% despite a recent cut in short-term interest rates by the Federal Reserve. The rise in mortgage rates in October has already sent the national amount of affordable listings down one point to 27%. The number of affordable home listings still hovers around 40% in Raleigh.

The unpredictable rate movements are quickly changing the affordability picture for home shoppers, according to the analysis by Zillow.

"Affordability remains the top challenge for first-time home buyers especially, and buying power can change quickly with the unpredictable nature of mortgage rates," said Orphe Divounguy, a senior economist for Zillow Home Loans. "Buyers should expect more ups and downs ahead for mortgage rates. While there's no guarantee, signs point to rates moving a bit lower into next year. However, the path will be bumpy, and buyers should stay ready to move forward when the time is right for them."

Still, interest rate cuts by the Federal Reserve have helped improve housing affordability compared to a year ago.

Last month, the share of affordable listings was greater than a year earlier in all of the nation's 50 largest metro areas, Zillow found.

Going forward, housing affordability will depend, in part, on mortgage rates, which could go up or down based on several factors.