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
\u201cI would love to buy a home, that\u2019s the next step,\u201d said Cowan, a business and life coach. But \u201cin New York, the entry in became so much more difficult,\u201d she said.<\/p>\n
In fact, New York notched the highest annual gain of all the metropolises in the latest Case-Shiller 20-city composite<\/a>, up 7.4% in May compared to 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 More from Personal Finance: In recent years, rising prices have made it harder for first-time home buyers to enter the market nearly nationwide, causing many millennials like Cowan to delay that traditional milestone<\/a>.<\/p>\n With record-high home prices and limited inventory, even a recent drop in mortgage rates<\/a> has done little to change that affordability equation. \u201cThis is holding back first-time home buyers from entering the market,\u201d Lawrence Yun, chief economist of the National Association of Realtors, said in a recent statement<\/a>.<\/p>\n<\/div>\n Across the country, the median age of first-time homeowners is now 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<\/a>. 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. \u201cIt\u2019s just taking longer for them.\u201d<\/p>\n<\/div>\n Higher mortgage rates have also helped keep first-time homebuyers on the sidelines.\u00a0<\/p>\n Although mortgage rates fell 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 below-3% levels near the start of the pandemic.<\/p>\n<\/div>\n \u201cThe American consumer has gotten very used to the low-rate environment that has spanned over a decade,\u201d said Bank of America\u2019s Vernon.<\/p>\n According to Bank of America\u2019s latest homebuyer insights study, 60% of current homeowners and prospective buyers \u2014 a three-year high<\/a> \u2014 said they\u2019re unsure whether now is the right time to buy.<\/p>\n \u201cNot knowing if rates are going to come down or go up is adding to the uncertainty in the marketplace,\u201d Vernon said.<\/p>\n<\/div>\n Where rates could be headed is key.<\/p>\n Fed Chair\u00a0Jerome Powell<\/a>\u00a0said\u00a0at a news conference<\/a>\u00a0in July that the Federal Reserve hadn\u2019t yet determined whether it would cut its benchmark rate at its September meeting.<\/p>\n However, even if the central bank does cut rates, \u201cit\u2019s not a guarantee that mortgage rates are going to fall and make housing more affordable,\u201d said Ashley Weeks, a wealth strategist at TD Wealth.<\/p>\n \u201cMortgage rates are more directly tied to the 10-year Treasury, <\/strong>so it\u2019s entirely possible mortgage rates remain flat or even increase regardless of where the Fed moves in September,\u201d Weeks said.<\/p>\n<\/div>\n Still, many 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\u2019t buy this year at any mortgage rate<\/a>, a whopping 13-percentage point jump from Bankrate\u2019s 2024 survey.<\/p>\n Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n\n
<\/strong>Mortgage rates have made a \u2018substantial improvement\u2019<\/a>
Fewer young adults reach key life, money milestones<\/a>
\u2018Job hugging\u2019 has replaced job-hopping, consultants say<\/a><\/p>\nThe housing affordability problem<\/h2>\n
![\"Why](\"https:\/\/image.cnbcfm.com\/api\/v1\/image\/106578086-1592229376692concept-money-keys-buy-dollar-property-cash-real-estate-credit-tax-success-economy-earn-wealth-taxes_t20_wq4abm.jpg?v=1592229591&w=750&h=422&vtcrop=y\")
The housing lock-in effect\u00a0<\/h2>\n
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