Housing costs keep rising, but if you can afford to buy, there might be less competition

Today’s housing market has two competing realities: a cost crunch that shows no signs of stopping, and a stretch of rising inventories and slowing competition that could offer relief — for those who can afford it.

Homebuying difficulty fell by a half-point to 82.2 in May, according to data published Friday from the NBC News Home Buyer Index. That easing owes to factors including improved supply and slowing buyer activity.

But affordability remains a block for potential buyers. The Home Buyer Cost Index — a subcategory that includes home prices, mortgage and insurance costs — increased for the fourth month in a row and remains near its all-time high.

“High prices combined with high mortgage rates means housing is incredibly unaffordable for those who have to finance their home purchase,” said Daryl Fairweather, chief economist at Redfin.

The median list price of an average home increased in 70% of U.S. counties from May 2023 to May 2024, with a median increase of $22,000.

The median list price was roughly $444,000, over $75,000 more than a median income household could afford as of May, according to an NBC News analysis of Redfin data.

There are some signs of improving conditions.

Competition is declining nationwide, as the Home Buyer Competition Index is at its lowest point in more than a year and has declined in eight of the past 10 months.

The decrease in competition is reflected in the time homes stay on the market, which has increased to near pre-pandemic levels. And the share of homes that sell within two weeks, 36%, is among the lowest it has been in the past five years.

Nationwide, 1 million homes were on the market in May, a 16% increase over May 2023 — but still 32% less than before the pandemic in May 2019. Nearly 70% of counties measured saw inventory increases in the last year, and seven of the 10 counties with largest inventory gains were in Florida.

Experts say, however, the story is more complicated.

Not all of the inventory gains are being reflected in better conditions for buyers — particularly in Florida. There, much of the increase in inventory was tied to rebuilding efforts in the wake of hurricanes that hit the southwest and northern parts of the state in the last two years.

Combined with a continued pace of solid job and population growth in the state, homes are still being purchased quickly, said Lawrence Yun, chief economist with the National Association of Realtors.

“Inventory has certainly increased [nationwide], but sales have yet to really get going,” he said. “So if inventory lingers for longer, that’s when we’ll really start to see price reductions.”

Yun said he sees hope ahead. With inventory increases across the country, homeowners are less tethered to the home they own, what he called a “golden handcuffs situation.”

“With each passing month, the strength of golden handcuffs is beginning to weaken.”