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The housing market is showing small signs of improvement in the US. September showed us that existing-home sales increased, despite rising mortgage rates and persistently high home prices. So for those first-time buyers who have been on the quest to purchase their first home, these recent figures are extremely positive. That being said, the main question is whether the market is now more open to first-time buyers or is still too expensive.

Recent data released by the National Association of Realtors (NAR) told us that existing-home sales rose by 1.5% in September to a seasonally adjusted annual rate of 3.99 million. That being said, these sales did remain lower than the previous year, showing that there are still challenges in the US housing market. The latest figures offer a mixed picture for prospective buyers. Yes, there are more homes available; however, there are higher borrowing fees and increasing property prices that continue to put homeownership beyond the reach of many first-time buyers.

US Home Sales Increase but Affordability Is the Core Difficulty

September's increase is positive in a way, as it indicates there are some buyers who are willing to enter the market despite those difficult economic times. That being said, it is very important to understand that the September improvement compared to August doesn't necessarily say that the market is now recovering. The median price of a property in the US in September was $417,500, which was a 1.3% increase compared to this time last year. This isn't good information for first-time buyers, as it communicates that property prices are continuing to increase.

Mortgage Rates Continue To Be a Huge Concern For Buyers

One of the core reasons first-time buyers are purchasing their first home is because of mortgage rates. Mortgage rates are not at their highest level since November 2023, when they reached 7.40%. These higher rates mean buyers pay more interest over the life of the mortgage and may even qualify for a smaller loan than they would at lower rates.

Consider someone borrowing $300,000 with a 30-year fixed-rate mortgage. At an illustrative interest rate of 7.4%, the principal and interest payment would be approximately $2,077 per month. At 6.5%, the payment would be about $1,896.

This means that the difference is roughly $181 each month, which can be an awful lot, especially when there are additional household costs. Additionally, this could actually be more, as the estimates exclude property taxes, homeowners insurance, mortgage insurance, homeowners association fees, and maintenance. These figures alone show that first-time buyers are not only considering the price for affordability. They are also considering the interest rates and the full cost of ownership.

Possibility That More Homes Could Create More Opportunities

It isn't all doom and gloom regarding people getting their first property. Existing-home inventory increased by 1.9% in September to approximately 1.6 million homes, which is the highest level since November 2019. A larger selection of properties can give buyers more time to compare neighborhoods, inspect homes, and evaluate whether the asking price is reasonable. This will reduce the pressure to make immediate offers because buyers are more concerned about losing the property.

Due to competition, sellers may be more willing to consider price reductions, closing-cost assistance, or credits for necessary repairs, depending on the market conditions in the local area. It is worth noting that not every home is becoming more affordable. Homes that are in very popular areas often attract more attention; therefore, it becomes more of a bidding war. On the other hand, you have properties that are more expensive and in less favourable areas, where, therefore, these can often be negotiated.

Is Now a Good Time to Buy?

Although the numbers in September were positive, it is important that first-time buyers don't fixate on these figures and hope that, in the next few months, they continue to improve. This is because high mortgage rates, elevated home prices, and affordability challenges remain significant barriers for first-time buyers. That being said, due to more properties being available, including off-plan properties, these offer greater negotiating power, which could actually benefit first-time buyers.

So the answer is all dependent on the individual. The best time to buy for anyone is when they are in a financial position where they are able to buy. Not just that, but they must also be able to afford a financial safety net and live in the property long enough for it to justify the cost of the property purchase.

There is no time like the present to buy your first property, especially if you have the money to do so. Ideally, you must have plenty of money left in the bank in case there are any repairs/renovations that need to be dealt with early.

Disclosure: This article is for general information only and is not a substitute for professional legal, financial, tax, lending, insurance, or maintenance advice. Rules, costs, and requirements vary by location and circumstance. Readers should verify details and consult qualified professionals before making rental, repair, borrowing, or investment decisions. This article may include compensated commercial links.