By: Hellen Zaboulani

The decline in mortgage rates will translate into more money for homebuyers to spend on their dream homes.

As reported by Crain’s NY, the rate for a 30-year fixed mortgage fell from 7.1% at the beginning of November to 6.1% at the end of January, marking the sharpest rate decline since 2009. As per a Street

Easy report, this decline will mean the average New York homebuyer will have an extra $83,000 in their home purchasing budget. The median asking price for a one- or two-bedroom home in the city was $800,000 in November, so that a buyer who needed to place a 20 percent down payment would pay $4,292 per month for their principal and interest payments, up 59.5% compared to November 2021.

When the Mortgage rate dropped in January, however, those numbers shifted, so that for the same home, the monthly payments would fall to just $3,874. This means the average New Yorker now has an expanded housing inventory available to them– increasing it by 12.5% in Manhattan, 10.5% in Brooklyn and 7.6% in Queens, per Street Easy.

Buyer demand for new houses in the city has already begun to rise, and this is probably partially thanks to the new lower mortgage rates. The average number of inquiries for homes listed on StreetEasy increased by 21.7% in January, compared to December, marking one of the strongest spurts to the year for roughly the past decade. The only time when the December-to-January increase was sharper was last year, when it had jumped by 23.1%, as buyers rushed to close on their purchases before theexpected mortgage rate increase.

As per the report, experts anticipate that the lower mortgage rates together with fairly strong employment in the city should boost home sales in the spring, especially since there is such a limited number of new homes expected to hit the market. Current home owners are still expected to be resistant to selling their homes with the new mortgage rates, since they purchased the homes at much lower mortgage rates than available now. New listings declined by 12.7 percent year over year in January, after falling by 24.3 percent year over year in December, per Crains.

Both Mayor Eric Adams and Gov. Kathy Hochul have said they will prioritize New York’s housing shortage. Adams has said he hopes to facilitate building 500,000 new homes in the city over the next decade, while Hochul set an aim to build 800,000 new homes across the state over the next ten years.

For now, the slow inventory growth has curtailed any drop in city’s home sale prices. The citywide sales price fell just 0.5% in January from December, as per the StreetEasy Price Index. The average price is $624,159, which is still 2.1% higher than in January 2022. The most pronounced price decline was in Manhattan, with a 1% decline in January from December, but that average price of $1.09 million too is still 1.4% higher than a year ago. The borough of Brooklyn saw the most impressive increase in home sale prices- with a 3.9% increase over a year ago, at an average sales price of $707,385.