Navigating Today’s Housing Market: NBC News Home Buyer Index Reveals Challenges
The new NBC News Home Buyer Index provides an in-depth look at homebuying difficulty across the U.S., factoring in home prices, competition, interest rates, and more.
Buying a home has become an increasingly difficult challenge for many across the country. Home prices have skyrocketed, mortgage rates have hit their highest levels in over two decades, and nearly 30% of homes are selling above their listing price. But these broad trends don’t tell the full story of the obstacles facing homebuyers, which can vary significantly from state to state and even county to county.
To better capture these shifting local conditions, NBC News has launched the Home Buyer Index, a new monthly metric that measures the difficulty of purchasing a home in different regions. The index, developed in collaboration with real estate industry experts and analysts from the Federal Reserve Bank of Atlanta, offers a number on a scale from 0 to 100, where higher values indicate greater difficulty for buyers.
For example, a score of 10 suggests a favorable market for buyers, with low interest rates and plenty of available homes. As of May, Chambers County, Texas, near Houston, ranked as one of the least difficult places to buy, thanks to its low prices, minimal competition, and greater home availability. On the other hand, a score closer to 90 indicates a challenging market, as seen in Coconino County, Arizona, where home prices have surged by 81% over the last five years.
The Home Buyer Index tracks four key factors to determine the level of difficulty:
Cost: How home prices compare to local incomes, including related expenses like insurance.
Competition: The number of buyers competing for homes and the intensity of demand. Metrics like the percentage of homes selling above the listing price and the rate at which homes go under contract within two weeks are factored in.
Scarcity: The availability of homes for sale and expectations for future listings.
Economic Instability: Market volatility, interest rates, and employment data that reflect the broader economic environment affecting potential buyers.
For December 2024, the national Home Buyer Index stood at 81.5, a slight increase from November but lower than the same time last year. While competition has eased somewhat, high home prices and limited inventory continue to create a challenging market for buyers.
The index is updated monthly on the last Thursday of each month, with the next update scheduled for February 27. It provides insights into the state of the housing market from both a national perspective and a county-level view for about 1,300 counties across the U.S. This data represents 85% of the nation’s population and allows for comparisons of homebuying conditions over time and across different areas.
Looking back over the last decade, the index reached its lowest point of 27.3 in January 2013, reflecting a time of low prices and minimal competition. In contrast, October 2022 saw the highest difficulty level with a score of 89.7, driven by fierce competition and rising costs following interest rate hikes aimed at curbing inflation.
However, the index has limitations. It doesn’t measure challenges faced by specific groups, such as those with lower credit scores or people of color who encounter systemic barriers to homeownership. Additionally, rural areas are less represented in the data due to limited available information.
By offering a detailed picture of local housing conditions, the NBC News Home Buyer Index aims to answer questions like:
How difficult is it to buy a home in my county or surrounding areas?
What specific challenges are homeowners facing in my location?
How has the home supply in my area changed since the pandemic?
With the NBC News Home Buyer Index, potential homebuyers can better understand the market dynamics where they live, allowing them to make more informed decisions in a housing market that continues to evolve.