Many of the ingredients of improved affordability are there: Lower mortgage rates, easing home prices, more homes for sale on the market. There’s a catch, though.
According to a report by CNBC, saving for a down payment is still the biggest hurdle for first-time buyers.
CNBC said that prices across the U.S. basically are flat compared with where they were a year ago, citing Parcl Labs, which runs daily studies of U.S. home prices. CNBC said that home prices fell into negative territory earlier this month and are now just 0.3% higher year over year.
CNBC also said that the latest S&P Cotality Case-Shiller home price index, which reflects pricing from October, showed large disparities among metropolitan markets.
Chicago, New York, Cleveland Show Biggest Gains
Of the top 20 markets the index highlights, Chicago; New York; and Cleveland, Ohio, had the biggest gains. Eight cities showed prices in negative territory, with Tampa, Florida; Phoenix, Arizona; and Dallas, Texas posting the biggest losses.
“National home prices also continue to lag consumer inflation, as October’s CPI is estimated around 3.1% (based on a provisional index the U.S. Treasury announced due to the federal data shutdown) – roughly 1.8 percentage points higher than the latest housing appreciation. In real terms, that gap implies a slight decline in inflation-adjusted home values over the past year,” Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a release.
CNBC noted that the average on the 30-year fixed mortgage is currently at 6.19%. The 30-year fixed rate started off 2025 well over 7%.
The decline means significant savings for homebuyers, CNBC said.
The typical homebuyer now needs seven years to save for a down payment, according to Realtor.com. That’s down from the recent peak of 12 years in 2022, but still roughly double pre-pandemic levels, partly because the personal savings rate is so much lower than it was in 2020.
Improved Supply Boosts Momentum
Down payments continue to be the biggest hurdle to homeownership, which in the second half of this year fell to 65%, according to the U.S. Census. That’s the lowest level since 2019.
An improved supply of homes for sale is giving momentum to the market, CNBC said. Active listings are now about 12% higher than they were a year ago, according to Realtor.com, but still 6% lower than they were just pre-pandemic.
Pending home sales rose more than expected in November. They were 3.3% higher than October, 2.6% higher than November 2024 and hit the highest level in nearly three years, according to the National Association of Realtors.
“Improving housing affordability–driven by lower mortgage rates and wage growth rising faster than home prices–is helping buyers test the market. More inventory choices compared to last year are also attracting more buyers to the market,” said Lawrence Yun, chief economist for the Realtors.
