Name: Home prices becoming more affordable; down payments hold buyers back
Uploaded: 2025-12-30T17:33:16.707Z
Duration: 2 min 10 s
Description: CNBC’s Diana Olick reports on improving housing affordability.

CNBC’s Diana Olick reports on improving housing affordability.

New York

Recent data from the S&P Case Shiller index shows U.S. home prices in October rose 1.4% year-over-year, with some cities experiencing gains and others seeing declines. Newer, more current indices indicate that prices have started to decrease nationally in recent weeks, while mortgage rates have fallen from over 7% to 6.19% for a 30-year fixed loan.

Despite improved affordability from lower prices and rates, the typical homebuyer now needs seven years to save for a down payment, which is still double the pre-pandemic average. Housing inventory is increasing compared to last year but remains well below historical levels, limiting the potential for further price declines.

Home prices becoming more affordable; down payments hold buyers back

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 percent 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 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, 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 percent from a year ago, but down 0.7 percent 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 percent, according to Mortgage News Daily. It started this year well over 7 percent. So weaker prices and lower 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 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 in 2020. The down payment continues to be the biggest hurdle to home ownership, which in the second half of this year fell to the lowest level since 2019. Sarah? But inventory is finally picking up, right, Diana? And that should put more pressure on prices. Is that coming? 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 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. Got it.

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