'As mortgage rates fall, how much income you need to buy a house for $250k, $400k and $1 m'

 A home buyer looking at a median-priced home would need to make six figures, Realtor.com says

Mortgage rates fell for the sixth week in a row, offering some financial relief to prospective home buyers.

The 30-year mortgage rate averaged 6.76% as of Feb. 27, the lowest rate in over two months, according to weekly data from Freddie Mac. Rates were down 9 basis points from the previous week, and down from 6.91% as of Jan. 2.

Mortgage rates are falling as investors weigh reports of a slowing U.S. economy and the possibility of a Federal Reserve interest-rate cut. The 30-year mortgage rate typically rises and falls in tandem with the yield on the 10-year Treasury note BX:TMUBMUSD10Y, which has been falling recently.

"Although a slowing economy may not seem like a good thing, lower rates could give the housing market the shot in the arm that it so desperately needs," Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

Home buying has sagged under the weight of high interest rates over the last few years. In January, there was a 4.6% drop in the number of contracts signed to purchase homes compared to the previous month, according to the National Association of Realtors. Pending home sales are now at an all-time low, the industry group said. It's been tracking pending home-sales activity since 2001.

"The drop in mortgage rates, combined with modestly improving inventory, is an encouraging sign for consumers in the market to buy a home," Sam Khater, chief economist at Freddie Mac, said in a statement.

Home prices hit record highs last year while mortgage rates have remained elevated, shutting many would-be buyers out of the market. People are still struggling to afford to buy homes, so "even a slight reduction in mortgage rates will likely ignite buyer interest, given rising incomes, increased jobs and more inventory choices," Lawrence Yun, chief economist at the NAR, said in a statement.

So how much money would a buyer now need to make to buy a home? Realtor.com provided some figures to help guide prospective homeowners. (Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

With a down payment of 20% and an estimated 30-year mortgage rate of 6.76%, while also factoring in property taxes and homeowners-insurance premiums, a home buyer would need to make at least $66,300 in yearly income to afford a home priced at $250,000, Hannah Jones, a senior economic research analyst Realtor.com, told MarketWatch.

That calculation assumes the buyer does not spend more than 30% of their gross income on housing costs, the level that is considered affordable.

To afford a $400,000 home, which was roughly the median price of an existing home as of January, a buyer would need to earn $106,100.

To afford a $1 million home - a price tag that's become far more common in the postpandemic era - a buyer would need to earn at least $265,100, Jones said. There are nearly 1 million more homes in the U.S. that are worth $1 million dollars than when the pandemic started, real-estate platform (Z) (ZG) estimated.

https://www.morningstar.com/news/marketwatch/20250301214/mortgage-rates-are-falling-heres-how-much-income-you-need-now-to-buy-a-house-for-250000-400000-and-1-million