10,000 hours | Digitalvision | Getty Images
There are areas in the US that are considered the least difficult places to buy a home, according to a new real estate index.
When counties are ranked by index ranking, Iroquois County, Illinois is the least difficult market to buy a home in, according to the NBC News Home Buyer Index.
The following counties were ranked as the least challenged areas when ranked by the four contributing factors:
- Cost: Iroquois County, Illinois is the most affordable or affordable housing market among measured counties in the US
- Competition: Somervell County, Texas is the least competitive housing market of the counties measured in the US
- Lack of: Imperial County, California is the least scarce housing market among the areas measured.
- Financial instability: Macon County, Tennessee has the most stable local economy among the counties measured.
More from Personal Finance:
How to get lower interest rates without a Fed rate cut
Here’s why car payments are so high right now
Gen Z harnesses ‘one of the magical properties of investing’
The index assesses cost, competition, scarcity and economic volatility.
Cost, the most heavily weighted component, measures how much a home costs relative to household incomes and inflation, as well as expenses such as insurance costs, according to NBC News.
Competition looks at the level of demand in an area or how many buyers are in the market for a house.
Scarcity refers to an area’s supply of retained homes for sale and how many more are expected to come on the market in the next month.
And finally, economic volatility takes into account the volatility of a region’s market, unemployment levels and interest rates.
NBC News Home Buyers Directory developed by NBC News along with housing experts including a real estate industry analyst and a banking economist from the Federal Reserve Bank of Atlanta.
On a scale of zero to 100, the index’s score represents the level of difficulty of buying a home in a U.S. county: The higher the value, the more difficult it is to buy a home in that area, according to with NBC.
But to compare counties against each other, it’s important to consider the index’s ranking because “the grades provide context to the scores,” said Joe Murphy, a data editor at NBC News who co-created the index.
A low index ranking — or closer to 1,310, the number of counties measured in this month’s report — indicates the county has better buying conditions for potential buyers. In other words, a county ranked number one “is the worst,” Murphy said.
For most Americans, buying—and even maintaining—a home in the US remains expensive.
The median sales price of homes sold in the U.S. was $420,800 in the first quarter of 2024, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau via the Federal Reserve Bank of the United States.
In addition to the high cost, the 30-year fixed rate mortgage in the US is still close to 7%. Borrowing costs are unlikely to change significantly as the Fed kept interest rates steady at its June meeting.
But if you’re planning or aspiring to own a home, there are ways to prepare, experts say.
Here are three things you should do
If you want to become a homeowner but are on the sidelines, “financial preparation is one of the most important things people can do” before buying a home, said Danielle Hale, chief economist at Realtor.com.
“Spend more time getting your finances in really good shape,” said Jacob Channel, senior economist at LendingTree. “It’s really important, especially when you’re making a six-figure purchase, to really take your time.”
Here are three things to consider:
1. Boost your credit score: Take some time to pay down debt and raise your credit score, Channel said.
Your credit score helps gauge how creditworthy you are as a borrower, Hale said. You could potentially qualify for a home purchase with a minimum credit score of 500, depending on the lender; according to Experian. But having a higher score can help you get better mortgage terms, Hale said.
“Doing everything you can to improve your credit score will increase your chances of getting a lower mortgage rate,” Hale said.
2. Get pre-approved by lenders: “It pays to start the process sooner rather than later so there aren’t as many surprises,” Hale said, especially for buyers who have never bought a home before.
Rate lock policies will depend on the lender. In some cases, a lender will allow you to lock in a mortgage rate after they pre-approve you, Channel said.
But generally, a pre-approval isn’t enough to guarantee a rate, Hale said, “because you can’t lock in a mortgage rate until you have a full mortgage application.”
“And you can’t make a full mortgage application until you have a specific property you want to buy,” he said.
Once a buyer makes an offer on a property and officially begins the application process, it’s possible the lender can lock in a mortgage rate if you ask, Hale said. Depending on the lender, the mortgage rate will be locked in for a period of 30 to 60 days, which is “plenty of time for the closing process to happen,” Hale said.
Ask your lender what the rate lock-in period is, and ask at what point in the process the mortgage rate is locked in, Hale said.
3. Budget intentionally and save: “What people should be doing is budgeting and saving,” Channel said. The more time you give yourself to save for expenses like a down payment and closing costs, he said, “the better off you’re probably going to be “.
When someone becomes a homeowner, “they’re going to have a higher monthly payment than they had before,” Hale said. So as you prepare for home ownership, consider putting aside an extra down payment, she suggested.
It would help save for a down payment or an emergency fund and “give an idea of how comfortable that housing payment really is,” Hale said.
“It’s better to be a renter who can afford the rental unit than to be a homeowner who can’t afford your home,” Channel said.
