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According to a new real estate indicator, there are areas in the United States where purchasing a home is considered least difficult.
When sorting counties by index rank, Iroquois County, Illinois, is the least difficult market to buy a home, according to the NBC News Home Buyer Index.
The following districts were classified as the least difficult areas when sorted according to the four influencing factors:
- Cost: Iroquois County, Illinois is the lowest cost or most affordable housing market among measured counties in the U.S.
- Competition: Somervell County, Texas, has the least competitive housing market of any county in the United States
- Scarcity: The housing market in Imperial County, California, has the least shortage of all areas measured.
- Economic instability: Macon County, Tennessee, has the most stable local economy of all areas measured.
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The index assesses costs, competition, scarcity and economic instability.
Cost is the most heavily weighted element, indicating how much a home costs relative to household income and inflation, as well as expenses such as insurance costs, according to NBC News.
The competition examines how great the demand is in an area or how many buyers are in the market for a home.
Scarcity refers to the supply of homes for sale in an area and the number of new homes expected to come on the market in the next month.
Finally, economic instability takes into account a region's market volatility, unemployment rate and interest rates.
The NBC News Home Buyer Index was developed by NBC News in collaboration with real estate experts, including a real estate industry analyst and a bank economist from the Federal Reserve Bank of Atlanta.
On a scale of zero to 100, the index score indicates how difficult it is to buy a home in a particular U.S. state: the higher the score, the more difficult it is to buy a home in that area, according to NBC.
But to compare counties, it's important to consider the index rank because “ranks provide context to the results,” says Joe Murphy, data editor at NBC News and co-developer of the index.
A low index score — or closer to 1,310, the number of counties included in this month's report — indicates that the county offers better market conditions for potential buyers. In other words, a county with an index score of one “is the worst,” Murphy said.
For most Americans, purchasing – and even maintaining – a home in the United States remains costly.
The median sales price for 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.
Adding to the high costs is the fact that the interest rate on 30-year mortgages in the US is still just under 7%. Since the Fed left interest rates unchanged at its June meeting, borrowing costs are unlikely to change significantly.
However, if you are planning or aspiring to own a home, experts say there are ways to prepare.
Here are three things you can do
If you want to become a homeowner but want to wait, “financial preparation is one of the most important things you can do” before buying a home, says Danielle Hale, chief economist at Realtor.com.
“Spend more time getting your finances in order,” said Jacob Channel, senior economist at LendingTree. “It's very important to really take your time, especially if you're making a six-figure purchase.”
There are three things to consider:
1. Improve your credit score: Take a moment to pay off your debt and improve your credit score, Channel said.
Your credit score helps measure your creditworthiness as a borrower, Hale said. According to Experian, you may be able to qualify for a home purchase if you have a credit score of at least 500, depending on the lender. However, a higher score may help you get better terms on the mortgage, Hale said.
“If you do everything you can to improve your credit score, your chances of getting a lower mortgage rate will increase,” Hale said.
2. Get pre-approval from lenders: “It’s worth starting the process sooner rather than later so there aren’t too many surprises,” Hale advises, especially for buyers who have never bought a home before.
Rate lock policies depend on the lender. In some cases, a lender will allow you to lock in a mortgage rate after giving you preliminary approval, Channel said.
But generally, pre-approval is not enough to guarantee an interest rate, Hale said, “because you can't lock in the mortgage rate until you have a complete mortgage application.”
“And you can’t complete a full mortgage application until you have a specific property you want to buy,” she said.
Once a buyer makes an offer on a property and officially starts the application process, it's possible for the lender to lock in a mortgage rate upon request, 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,” Hale said.
Ask your lender about the length of the rate lock-in period and ask at what stage of the process the mortgage rate will be locked, Hale said.
3. Budget and save consciously: ““People should budget and save,” Channel said. “The more time you take to save money for expenses like the down payment and closing costs, the better off you're likely to be,” he said.
When someone purchases a home, “they're going to have a higher monthly payment than they had before,” Hale said, so set aside an extra payment as you prepare to purchase a home, she suggested.
This would help build savings for a down payment or emergency fund and give “an idea of how comfortable paying the rent” really is, Hale said.
“It’s better to be a renter who can afford your rental property than to be a homeowner who can’t afford your house,” Channel said.