Here are the signs of an improving housing market

Home affordability has slightly improved for buyers this summer, according to a recent report. 

The median new mortgage payment was $2,167 in June, a 2.4% decline from $2,219 in May, according to new data from the Mortgage Bankers Association. The index measures how new monthly mortgage payments change over time, relative to income. 

A decrease in the index shows borrower affordability improved, which can happen when loan application amounts and mortgage rates decrease, or homebuyer earnings grow.

“Homebuyer affordability conditions improved for the second straight month as declining mortgage rates continue to increase purchasing power and is enticing some borrowers back into the housing market,” Edward Seiler, MBA’s associate vice president of housing economics, wrote in the release.

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Lawrence Yun, chief economist and senior vice president of research of the National Association of Realtors, also sees promising indicators for homebuyers.

“Housing affordability is improving ever so modestly, but it is moving in the right direction,” he said.

The median loan amount on new applications fell to $320,512 in June, from $325,000 in May, a sign that home-price growth is moderating as well, according to MBA data provided to CNBC.

A slight decrease in mortgage rates in the month of June definitely helped buyers, said Yun.

The 30-year fixed rate mortgage declined to 6.78% on July 25, down from 7.22% on May 2, according to Freddie Mac data via the Fed.

But it’s a “very small improvement” in context, he said — the typical monthly mortgage payment has essentially doubled from pre-Covid years. Before Covid, a $1,000 mortgage payment was the norm; today it’s above $2,000, he said.

“In the bigger picture, it is a substantial increase on pre-Covid conditions, yet on a month-to-month basis, it is a slight improvement,” Yun said.

Investors think the Federal Reserve could cut interest rates about three times in the latter half of the year, which would “further improve housing affordability,” Yun added.

While the housing market isn’t yet a buyer’s market, more supply and declining rates indeed create favorable conditions for buyers, according to experts.

“The market is certainly tilting more towards buyers,” said Chen Zhao, the economic research lead at Redfin, an online real estate brokerage firm, who said the market is balancing itself.

While there’s still an affordability challenge broadly, conditions are…