U.S. homebuyers gain extra $200,000 in spending power due to decreased mortgage rates in certain cities.

Home buyers in the 100 largest U.S. cities are gaining a median of $70,000 in additional buying power due to the decline in 30-year fixed mortgage rates from 7.79% in October 2023 to 6.2% last week, according to a Realtor.com analysis.

A U.S. buyer can now purchase a home $70,000 more expensive than their initial budget.

The research examined the monthly payment for a median-priced home in the U.S., a 20% down payment, and a 6.2% mortgage rate. The analysis was conducted in the 100 largest cities, calculating the additional buying power homebuyers have in each local market compared to the previous year.

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In cities with the priciest homes, buyers experienced the greatest increase in their spending power. For instance, in San Jose, California, buyers can now purchase a $1.6 million home with the same monthly payment they could make for a $1.4 million home a year ago, as per Realtor.com.

The Federal Reserve's decision to cut its benchmark federal funds rate by 50 basis points last week is expected to lead to a decline in mortgage rates to 6% or less at some point in 2025.

The analysis shows that the additional buying power for homebuyers in the 100 largest metro areas would increase to $84,800 for a median-priced home, compared with October 2023.

The 15 metro areas with the greatest increase in buying power due to 6.2% and 6% mortgage rates are listed below. The buying power of each buyer in these markets has increased compared to October 2023.

1. San Jose

• October 2023 median list price: $1,380,694
• Extra buying power with 6.2% rate: $240,556
• Extra buying power with 6% rate: $275,489

2. Los Angeles

• October 2023 median list price: $1,159,000
• Extra buying power with 6.2% rate: $201,931
• Extra buying power with 6% rate: $231,254

3. San Francisco

• October 2023 median list price: $1,098,000
• Extra buying power with 6.2% rate: $191,303
• Extra buying power with 6% rate: $219,083

4. Ventura County, California

• October 2023 median list price: $1,050,000
• Extra buying power with 6.2% rate: $182,940
• Extra buying power with 6% rate: $209,506

5. San Diego

• October 2023 median list price: $999,000
• Extra buying power with 6.2% rate: $174,054
• Extra buying power with 6% rate: $199,330

6. Bridgeport, Connecticut

• October 2023 median list price: $889,225
• Extra buying power with 6.2% rate: $154,928
• Extra buying power with 6% rate: $177,426

7. Boston

• October 2023 median list price: $837,374
• Extra buying power with 6.2% rate: $145,894
• Extra buying power with 6% rate: $167,081

8. Honolulu

• October 2023 median list price: $798,750
• Extra buying power with 6.2% rate: $139,165
• Extra buying power with 6% rate: $159,374

9. Seattle

• October 2023 median list price: $792,250
• Extra buying power with 6.2% rate: $138,032
• Extra buying power with 6% rate: $158,077

10. New York

• October 2023 median list price: $729,444
• Extra buying power with 6.2% rate: $127,090
• Extra buying power with 6% rate: $145,545

11. Sacramento, California

• October 2023 median list price: $649,000
• Extra buying power with 6.2% rate: $113,074
• Extra buying power with 6% rate: $129,494

12. Denver

• October 2023 median list price: $635,000
• Extra buying power with 6.2% rate: $110,635
• Extra buying power with 6% rate: $126,701

13. Portland, Oregon

• October 2023 median list price: $619,995
• Extra buying power with 6.2% rate: $108,021
• Extra buying power with 6% rate: $123,707

14. Washington, D.C.

• October2023 median list price: $599,995
• Extra buying power with 6.2% rate: $104,536
• Extra buying power with 6% rate: $119,717

15. Portland, Maine

• October 2023 median list price: $599,950
• Extra buying power with 6.2% rate: $104,528
• Extra buying power with 6% rate: $119,708

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