Mortgage Pre-Approval First-time Home Buyers
Learn how to get pre-approved for a mortgage if you’re a first-time homebuyer.
February showed promising results for the spring housing market. Although existing home sales are up and mortgage rates are below 6% for the first time in years, home prices are not rising as fast as they used to.
But that all came to nothing in March.
According to data released by the National Association of Realtors, sales of existing homes in the United States in March fell 3.6% from the previous month and 1% from the previous year to 3.98 million units.
This was the slowest pace of home sales in March since 2009, according to NAR. This is also the slowest pace in nine months.
By region, the Northeast had the lowest share of existing home sales at 11%. The South had the highest percentage at 47%, followed by the West and Midwest at 19% and 23%, respectively.
According to NAR, the number of pending home sales nationwide in March increased 1.5% from the previous month, but was down 1.1% from the same month last year.
“The housing market continues to be very difficult for homebuyers, with a lot of downturns,” said Kate Wood, senior writer and lending expert at NerdWallet. “Current events in March, such as the Iran conflict, have created great uncertainty in people’s outlook.”
The median home price also hit a new record high for March, reaching $408,800 nationwide.
Wood said basic economics suggests that rising interest rates will force sellers to lower home prices because a lack of affordability reduces demand. However, that is not happening due to a significant lack of inventory on the market.
And this is likely the result of a lock-in effect where homeowners with low mortgage rates do not sell their homes. Even if someone wanted to do a lateral migration rather than an upgrade, Wood said it would be much more difficult to do so while maintaining the same budget.
According to 2024 data from the Federal Housing Finance Agency, each time current interest rates exceed a homeowner’s interest rate, the probability of putting a home on the market decreases by 18.1%.
This means that if a homeowner has an interest rate of 3%, they are almost 60% less likely to put their home up for sale than if the current interest rate is 6%.
“Homeowners, especially those with low interest rates, have a double advantage. They had lower mortgage rates and bought their homes at a lower price,” Wood said. “At the same time, people who are looking to buy a home in today’s market are in some ways doubly disadvantaged because mortgage rates have gone up significantly and home prices are also much higher.”
If you’re a first-time buyer looking to compete for a home in this difficult market, Wood recommends working with a knowledgeable professional who can properly guide you through the process.
He also recommended being strategic about what you’re looking for in a seller, and determining whether you can achieve some of the seller’s priorities, such as a quick closing.
You should also check whether your financial situation is in order. Wood says this includes already getting pre-approved for a mortgage and having all your financial documents in place when you start shopping.
Maddie McGay is a real estate reporter for NorthJersey.com and The Record, covering everything that’s worth celebrating about living in North Jersey. Find her on Instagram @maddiemcgay or X @maddiemcgayy and sign up for the North Jersey Living newsletter. Have a tip, trend, or great home she should know about? Email MMcGay@gannett.com.
