Interest rates play a pivotal role in the housing market. When rates drop, borrowing becomes more affordable, making it easier for people to buy homes or refinance existing mortgages. Recently, the average contract interest rate for 30-year fixed-rate mortgages fell to 6.73%, down from 6.88%. This decline, the largest weekly drop since late 2024, has been attributed to a mix of economic factors, including consumer sentiment and market uncertainties.

Lower interest rates reduce monthly mortgage payments, making homeownership more accessible. For instance, a 0.15% drop in rates can save homeowners hundreds of dollars annually, depending on the loan amount. This financial relief has encouraged both first-time buyers and seasoned homeowners to take action.

The sales price is the amount that a buyer agrees to pay and a seller agrees to accept for a home. This number is typically determined through negotiations between the buyer and seller, factoring in the market demand, the seller’s asking price, and the buyer’s offer.

For instance, if a seller lists their home at $300,000, a buyer may offer $290,000, and after some negotiation, they might settle on a sales price of $295,000. This agreed-upon price becomes the basis for the purchase contract, which legally binds both parties to the transaction.

However, it’s important to note that the sales price is not the ultimate determinant of the home’s value. Just because you’re willing to pay $295,000 doesn’t mean the property is objectively worth that amount. That’s where the appraised value comes in.