{"id":19681,"date":"2025-08-20T20:44:59","date_gmt":"2025-08-20T20:44:59","guid":{"rendered":"https:\/\/finderica.com\/?p=19681"},"modified":"2025-08-20T20:44:59","modified_gmt":"2025-08-20T20:44:59","slug":"why-home-buyers-are-on-the-sidelines","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=19681","title":{"rendered":"Why home buyers are on the sidelines"},"content":{"rendered":"
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Lorene Cowan, 44, thought she would own a home by now. However, in New York City, where Cowan lives and works, home prices have soared beyond reach.<\/p>\n

“I would love to buy a home. That’s the next step,” said Cowan, a business and life coach. But “in New York, the entry in became so much more difficult,” she said.<\/p>\n

In fact, New York notched the highest annual rise in home prices of all the metropolises in the latest Case-Shiller 20-city composite<\/a>, up 7.4% in May compared with the prior year. The median listing price of a home in New York City is now more than $829,000, up 3.8% year over year,\u00a0according to Realtor.com<\/a>.<\/p>\n

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In recent years, rising prices across the country have made it harder for first-time homebuyers to enter the market, causing many millennials such as Cowan to delay that traditional milestone.<\/p>\n

Even a recent drop in mortgage rates has done little to change that affordability equation. Undersupply is contributing to high prices,\u00a0“holding back first-time home buyers from entering the market,” Lawrence Yun, chief economist of the National Association of Realtors, said in a recent statement<\/a>.<\/p>\n<\/div>\n

<\/a>The housing affordability problem<\/h2>\n
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In the U.S., the median age of first-time homeowners is 38 years old, an all-time high,\u00a0according\u00a0to a 2024 report by the\u00a0National Association of Realtors<\/a>. In the 1980s, the typical first-time buyer was in their\u00a0late 20s. And first-time buyers currently make up just 24% of the market, the lowest share on record,\u00a0according to NAR<\/a>.\u00a0<\/p>\n

Millennials and Gen Z still believe in the dream of homeownership as a wealth-building opportunity and an achievement, said Matt Vernon, head of consumer lending at Bank of America. “It’s just taking longer for them,” he said.<\/p>\n<\/div>\n

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Higher mortgage rates have also helped keep first-time homebuyers on the sidelines.\u00a0<\/p>\n

Although mortgage rates fell recently<\/a> to their lowest level since October, the average rate for a 30-year, fixed-rate mortgage\u00a0is still just above 6.5%, according to Freddie Mac<\/a> \u2014 a big leap from the under 3% levels near the start of the pandemic.<\/p>\n<\/div>\n

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“The American consumer has gotten very used to the low-rate environment that has spanned over a decade,” said Vernon.<\/p>\n

According to Bank of America’s latest homebuyer insights study, 60% of current homeowners and prospective buyers \u2014 a three-year high<\/a> \u2014 said they’re unsure whether now is the right time to buy.<\/p>\n

“Not knowing if rates are going to come down or go up is adding to the uncertainty in the marketplace,” Vernon said.<\/p>\n<\/div>\n

<\/a>The housing lock-in effect\u00a0<\/h2>\n
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Where rates could be headed is key.<\/p>\n

Federal Reserve Chair\u00a0Jerome Powell\u00a0said\u00a0at a news conference\u00a0in July that the Fed hadn’t yet determined whether it would cut its benchmark interest rate at its September meeting.<\/p>\n

However, even if the central bank does cut rates, “it’s not a guarantee that mortgage rates are going to fall and make housing more affordable,” said Ashley Weeks, a wealth strategist at TD Wealth.<\/p>\n

“Mortgage rates are more directly tied to the 10-year Treasury, <\/strong>so it’s entirely possible mortgage rates remain flat or even increase regardless of where the Fed moves in September,” Weeks said.<\/p>\n<\/div>\n

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Still, many prospective homebuyers believe lower rates will come and that will help ease the housing affordability problem.<\/p>\n

Roughly 75% of prospective homebuyers expect home prices and interest rates to fall and are waiting until then to buy a new home, Bank of America also found in its survey of 2,000 adults in March and April.<\/p>\n

About one-third, or 32%, of Americans said they would need mortgage rates to fall below 6% to feel comfortable buying this year, according to another recent report by Bankrate<\/a>.<\/p>\n

However, more than half \u2014 51% \u2014 of those polled said they wouldn’t buy this year at any mortgage rate<\/a>, a whopping 13 percentage point jump from Bankrate’s 2024 survey.<\/p>\n

Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Lorene Cowan, 44, thought she would own a home by now. However, in New York City, where Cowan lives and works, home prices have soared beyond reach. “I would love to buy a home. That’s the next step,” said Cowan, a business and life coach. But “in New York, the entry in became so much<\/p>\n","protected":false},"author":1,"featured_media":19682,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[1628,26,7826],"class_list":{"0":"post-19681","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-buyers","9":"tag-home","10":"tag-sidelines"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/19681","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19681"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/19681\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/19682"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19681"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19681"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19681"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}