Home prices are becoming more affordable; down payments still hold buyers back

Diana Olick (Senior Real Estate Correspondent) 00:00.000

Well, David, we just got the latest home price data from S&P Case Shiller. It shows prices in October nationally were up 1.4% from October of last year. Of the top 20 markets, it highlights Chicago, Cleveland, and New York City had the biggest gains. Meanwhile, eight cities have

Diana Olick (Senior Real Estate Correspondent) 00:16.840

prices in negative territory with Tampa, Phoenix, and Dallas seeing the biggest losses. Now, it's important to note that this index is actually a three-month running average. So, it's really prices from August through October. While it has long been the gold standard in prices,

Diana Olick (Senior Real Estate Correspondent) 00:31.080

there are other newer indices that are much more current. Parcel Labs, for example, which tracks with Case Shiller, but gives daily reads, started showing prices going negative nationally earlier this month. As of today, Parcel shows prices up just 0.3% from a year ago, but down

Diana Olick (Senior Real Estate Correspondent) 00:48.120

0.7% this month. So, prices are definitely easing and mortgage rates are much lower than they were at the start of this year. The average on the 30-year fixed is currently at 6.19% according to mortgage new to daily It's started this year well over 7%. So weaker prices and lower

Diana Olick (Senior Real Estate Correspondent) 01:04.360

rates are changing the math on what first time buyers can afford. The typical home buyer now needs seven years to save for a down payment. That's according to realtor.com. It may sound like a lot, but it's actually down from the recent peak of 12 years in 2022. That is the good

Diana Olick (Senior Real Estate Correspondent) 01:20.880

news. The bad news is that the current time to save is still about double pre-pandemic levels, partly because the personal savings rate is so much lower than it was was in 2020. The downpayment continues to be the biggest hurdle to home ownership, which in the second half of

Diana Olick (Senior Real Estate Correspondent) 01:36.000

this year fell to the lowest level since 2019. Sarah?

Sarah Eisen (Anchor) 01:40.080

But but inventory is finally picking up, right, Diana? And and that that should put more pressure on prices. Is that coming?

Diana Olick (Senior Real Estate Correspondent) 01:46.240

I It should. I mean, look, inventory is picking up compared to a year ago, but it's still significantly lower again compared with pre-pandemic levels. So, if you talk about historical norms, we're just not there. Housing is still very pricey and we still need more inventory. We

Diana Olick (Senior Real Estate Correspondent) 02:00.080

need more from the home builders. So, yeah, it is bringing prices back to a kind of flat level, but we're not going to see them go significantly lower.

Sarah Eisen (Anchor) 02:09.520

Got it.