Over the past couple of years, buying a home has been a significant challenge for many. Tight affordability has kept the dream of homeownership just out of reach for a lot of people. But there’s good news on the horizon—affordability is starting to show signs of improvement and may continue to get better as the year progresses. Dee McDonough, owner of S&D Real Estate, says, "While it’s been tough for buyers, we’re finally seeing some positive shifts in the market. Affordability is inching in the right direction, making homeownership a bit more attainable."

Let’s dive into the three major factors influencing housing affordability right now: mortgage rates, home prices, and wages.

Mortgage Rates

Mortgage rates have been unpredictable this year, fluctuating between the mid-6% to low 7% range. However, there’s some encouraging news. Data from Freddie Mac shows that since May, rates have generally been trending downward. This improvement in mortgage rates is partly due to recent economic, employment, and inflation data. While we can expect some continued volatility, experts believe that if the economy continues to cool, mortgage rates might drop further. Even a small decrease in rates can significantly affect your ability to afford a home, lowering your monthly payments and making the home of your dreams more accessible. Just keep in mind, rates likely won’t return to the historic lows of 3%.

Home Prices

Another key factor to consider is home prices. Nationally, prices are still rising, but at a much slower pace than we saw during the pandemic. This slower growth is a positive sign for buyers. During the pandemic, rapid price increases made it difficult for many to enter the market. Now, with prices rising more moderately, buying a home feels a little less daunting. Odeta Kushi, Deputy Chief Economist at First American, adds, “While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help – so the dream of homeownership isn’t boarded up just yet.”

 Wages

Rising wages are also playing a crucial role in improving affordability. The latest data from the Bureau of Labor Statistics (BLS) shows that wages have been increasing faster than usual. This uptick in income is good news for prospective homebuyers. As your income grows, you’ll spend a smaller portion of your paycheck on a monthly mortgage, making it easier to manage and afford a home.

Bottom Line

When you look at the big picture, there’s reason to be optimistic. Mortgage rates are trending downward, home prices are growing more slowly, and wages are on the rise. While housing affordability remains a challenge, these trends suggest that the situation is starting to improve. As Dee McDonough from S&D Real Estate notes, "It’s still a challenging market, but the landscape is shifting in favor of buyers. With the right strategy and guidance, now could be a great time to take steps toward homeownership."

For personalized guidance on the current market, reach out to us at S&D Real Estate, (863) 824-7169 or AgentCare@SandDRealEstate.com.

 If you need financing advice, our preferred lending partner, Kim Krueger (NMLS 22885983) at Prime Meridian Bank (NMLS 393620), is also available to assist you. Contact her at (863) 347-3493 or KKrueger@primemeridianbank.com. 

Whether you're looking to buy your first home, sell a property, or invest in real estate, our experienced team is committed to helping you make informed, strategic decisions. At S&D Real Estate, we understand that real estate transactions are major milestones, and we're here to turn your goals into reality with professionalism and care.