It’s never been easy to buy a home. Exactly 40 years ago, in 1986, the average home cost only $92,000. Today, it’s nearly $400,000.
Way back in 1986, Inflation was only 1.1% – a far cry from the record-setting 8% in 2022. Sadly, inflation is still at 2.4% right now.
But in 1986, you’d be lucky to get a mortgage with an interest rate under 10%. Despite the affordability crisis today, mortgage rates are just over 6%. So it’s never a perfect time to buy a home. There’s only a better time to buy. And that may be approaching.
After years of bad news about rising prices and shrinking availability, I’m encouraged by three developments.
1. Existing home sales fall
“Existing home sales decreased by 8.4% in January,” announced the National Association of Realtors. “Month-over-month and year-over-year sales fell in all regions.”
Obviously, real estate agents don’t like that.
“The decrease in sales is disappointing,” NAR’s chief economist Lawrence Young said. “Affordability conditions are improving. This is due to wage gains outpacing home price growth and mortgage rates being lower than a year ago.”
This is good news, despite NAR also reporting that the price of homes is still rising. Then again, it’s “up 0.9% from one year ago.”
Slowing sales usually mean prices drop – eventually. It’s impossible to know when, but if home sellers aren’t getting offers, they’ll need to drop the price or stay put. That’s simple supply-and-demand economics.
While that’s bad news for anyone looking for a home today, it might be better news for future shoppers.
2. Mortgage rates dip
In January, the Associated Press reported, “The average rate on a 30-year mortgage briefly dropped last month to 6.06%, the lowest level since September 2022.”
Those rates go up and down constantly, so there’s no guarantee rates will continue to drop. But it’s a good sign that, despite the economic uncertainty and sour mood about affordability, rates aren’t a major problem. Of course, I wish they would return to those heady days of 3% and 4% mortgages in the middle of the last decade, but I’m just happy we’re not in 1980s territory.
3. Down payments shrink
It’s not just the steep price of a home that keeps Americans from buying. It’s also the hefty down payment.
“The typical U.S. homebuyer’s down payment fell 1.5% year over year to $64,000 in December, the first decline in five months,” reported real estate brokerage Redfin.
If you’re like me, you saw that $64,000 number and winced. That’s a huge pile of cash. Still, any reduction is welcome. If that continues in 2026, it’ll be a welcome relief for homebuyers.
4. Credit scores expand
This is a little technical, but the results could be profitable for struggling homebuyers: The federal government is allowing Congress-created Fannie Mae and Freddie Mac to use another credit score method.
You’ve probably heard of FICO, but you may not know it’s a private company. It has a competitor called VantageScore, which is newer and not as popular among lenders. Fannie and Freddie required lenders to use FICO. But now, as the Wall Street Journal reported this month, under newly proposed rules, “lenders would be allowed to choose which score to use when underwriting mortgages.”
How does that help you? As the Journal explains, “lenders, Realtors, and borrowers could simply choose the more favorable score, leading to more approvals.” You see, credit scores aren’t all the same. For example, VantageScore doesn’t include medical debt, while FICO does. So it’s possible you get a lower interest rate because of this technical change.
It’s still rough out there
Nothing I’ve written should be read as, “Happy days are here again!” Buying a home is still a chore and always will be. But for the past several years, it’s also been an impossible dream for so many Americans. Maybe I’m being way too optimistic, but I desperately want to believe things are slowly getting better.
I’ve been in this line of work long enough to see massive shifts in home-buying access. If nothing else, I want you to walk away today knowing this: Home buying and selling isn’t static. It changes all the time. If you ride the right wave, it can carry you right into your dream home.
