Is it a good time to buy a home given the current interest rates and housing prices? This question is on the minds of many prospective homebuyers as they navigate the complex landscape of today’s real estate market. In this blog, we’ll provide the essential information you need to make an informed, data-driven decision about home buying in the current economic climate.

Current Mortgage Interest Rates

As of July 2024, the average mortgage interest rate for a 30-year fixed-rate mortgage hovers around 7.04% (Bankrate, 2024). To put this into perspective, if you’re looking to purchase a home at the current median price of $416,100 (National Association of Realtors, 2024), your monthly mortgage payment on a 30-year loan would be approximately $2,773, assuming a 20% down payment and excluding property taxes and insurance.

The State of the U.S. Economy

The U.S. economy is experiencing a unique blend of robust job growth and persistent inflation. The unemployment rate stands at 3.6% (Bureau of Labor Statistics, 2024), indicating strong employment numbers. However, inflation remains a concern, with rates fluctuating around 4-5% over the past year (U.S. Department of Labor, 2024). Average household incomes have risen slightly to approximately $74,580 annually (U.S. Census Bureau, 2024), but the cost of living and housing prices continue to challenge affordability for many.

Given this information, are you ready to buy a home today? If you’re uncertain, take a look at this article for homebuyer readiness assessment to help evaluate your individual situation.

Mortgage Approval and Housing Inventory

The current mortgage approval rate is about 75% (Federal Reserve Bank, 2024), reflecting stringent lending standards. Housing inventory remains tight, with a national average of 2.5 months of supply (National Association of Realtors, 2024). Even with these challenges, it may be possible to enter the market if your finances are ready.

The average homebuyer today typically has a credit score of around 740 (Experian, 2024). The average down payment for a homebuyer is approximately 12% of the home’s purchase price, translating to about $49,932 for a median-priced home. Closing costs generally range from 2% to 5% of the loan amount, averaging around $8,322. The average time to close on a house is about 45 days (Ellie Mae, 2024).

Consider This

1. Selecting a Lender: Look for lenders who offer competitive rates, good customer service, and transparency. Compare at least three different lenders.
2. Finding a Real Estate Agent: Engage a real estate agent early in the process, but ensure you’re not rushed into the market before you’re ready.

How to Find a Good Real Estate Agent

A good real estate agent can make a significant difference in your homebuying experience. Look for agents with strong local knowledge, good reviews, and a track record of successful transactions. Websites like Zillow, Realtor.com, and local real estate agency sites can help you find and review potential agents.

Down Payment Assistance

Down payments are typically required to secure a mortgage, and if you put down less than 20%, you’ll likely need to pay for private mortgage insurance (PMI). PMI can add a significant amount to your monthly payment. So, is it better to have a down payment or not? Generally, avoiding PMI can save you money in the long run.

The average homebuyer this year has paid about 12% of the home’s purchase price as a down payment. For a $416,100 home, this amounts to approximately $49,932 (National Association of Realtors, 2024). Tips for securing your down payment include:

• Saving aggressively: Set aside a portion of your income each month.
• Exploring down payment assistance programs: These programs vary by state and can include grants, second mortgages, or tax credits.
• Using gifts or loans from family: Many buyers receive help from relatives.

Current Homeowners and Market Impact

Current homeowners with existing mortgages often enjoy lower interest rates, averaging around 4% compared to the current 7.04% rates (Freddie Mac, 2024). This disparity makes many homeowners hesitant to sell, contributing to the low inventory and sustained high prices.

The trend in supply and demand significantly influences home prices. As supply remains low and demand high, prices continue to rise. For detailed trends, refer to the latest data from the National Association of Realtors.

Conclusion

Navigating the current real estate market can be daunting, but with the right information and resources, you can make a sound decision. If you need help getting financially ready to buy in the next year or two, I can assist you with organizing your finances and improving your credit score through a comprehensive Protection Plan from United Credit Education Services. For just $80 to start, you can access tools for budgeting, credit monitoring, credit building, and more here.

For further information on financial services, visit our link tree for Smart Finance Partners. If you’re ready to pre-qualify for a loan or seek loan approval, email me, Dr. Angela Dawson at Angela2581671@capitalfcu.org or call 1-888-417-9193. As a licensed Mortgage Loan Originator with Capital Federal Credit Union, I can guide you through the home buying process and help you explore government home purchase programs and down payment assistance options.

Join our virtual workshops on homeownership through Smart Finance Partners, where we are focused on building futures and financing dreams.

References

1. Bankrate. (2024). Current mortgage interest rates.
2. Freddie Mac. (2024). Primary Mortgage Market Survey.
3. National Association of Realtors. (2024). Existing-home sales data.
4. Bureau of Labor Statistics. (2024). Unemployment rate.
5. U.S. Department of Labor. (2024). Consumer Price Index.
6. U.S. Census Bureau. (2024). Median household income.
7. Federal Reserve Bank. (2024). Mortgage loan approval rates.
8. Ellie Mae. (2024). Origination Insight Report.
9. Experian. (2024). Average credit score for homebuyers.