Home Buying Difficulty: Mortgage Rates & Real Estate Market

The current housing market is facing a number of challenges, making it difficult for many people to buy a home. High mortgage rates, rising home prices, and a limited supply of homes available for sale are just some of the factors making the home purchase process more challenging.

Factors Affecting Home Buying Difficulty

To better understand the factors contributing to the difficulty of buying a home in the current market, the NBC News Home Buyer Index was created. This index measures the difficulty of buying a home across the country, taking into account various factors.

• Cost: The cost of a home relative to incomes and inflation. This includes factors like insurance costs and how they are changing.
• Competition: The number of buyers competing for homes and how aggressive the demand is. Factors like the percentage of homes selling above the asking price and the number of homes going under contract within two weeks of being listed are considered.
• Scarcity: The number of homes available on the market and the expected increase in the number of homes coming on the market in the future.
• Economic Instability: Market volatility, unemployment rates, and interest rates that reflect the broader economic climate influencing home purchase decisions.

Mortgage Rates Impact on Housing Market

The impact of rising mortgage rates on the housing market is a significant factor influencing home buying difficulty. With mortgage rates exceeding 7%, the cost of borrowing money for a home purchase has increased, putting strain on potential home buyers.

National Home Buyer Index

The national Home Buyer Index, presented below, provides a snapshot of the overall home buying difficulty across the United States. The index is measured on a scale of 0 to 100, with higher scores indicating more difficult buying conditions.

Month	Index Value
June	85.3
July	85.3

The national index for July 2024 was 85.3, which is nearly equal to the June index and two points lower than it was a year ago. This suggests some improvement in market competitiveness and the broader economy, but high costs and continued housing shortages have kept overall home buying difficulty elevated.

Local Housing Market Conditions

The Home Buyer Index also examines local housing market conditions, measuring the difficulty of buying a home at the county level. This allows for a more granular understanding of the housing market across different regions and locations.

• Least Difficult: Chambers County, Texas, near Houston, is one of the 50 least difficult places to buy a home in the country. Low scores in scarcity, cost, and competition contribute to this ranking.
• Most Difficult: Coconino County, Arizona, is ranked among the 25 most difficult counties to buy a home in. Rising home prices, increasing at a rate nearly double the national average, are a primary factor.

Impact of Mortgage Rates on Home Prices

The impact of mortgage rates on home prices is complex and multifaceted. While higher mortgage rates may slow down the rate of home price appreciation, the demand for housing still remains high in many areas, leading to continued upward pressure on prices. The tight housing market, characterized by a shortage of available homes, can further exacerbate this dynamic.

Strategies for Home Buyers

Given the current challenges in the housing market, home buyers need to consider various strategies to navigate the competitive landscape and increase their chances of successfully securing a home.

• Get Pre-Approved for a Mortgage: Demonstrating your financial readiness by obtaining pre-approval for a mortgage can strengthen your position as a buyer and provide assurance to sellers.
• Be Prepared to Act Quickly: The competitive market requires speed. Be ready to make an offer promptly if you find a suitable property.
• Consider Location Flexibility: Expanding your search area may lead to finding more affordable options and reducing competition.
• Work with a Real Estate Agent: A knowledgeable and experienced real estate agent can provide valuable insights into the market, assist with negotiations, and guide you through the home purchase process.