Americans are in limbo about where the housing market could go next, but they are resolute about the conditions for buying right now.
Nearly 80% of Americans think it’s a bad time to buy a house, according to the Fannie Mae Home Purchase Sentiment Index (HPSI), a survey gauging homebuying and selling confidence. The index stayed flat in April compared to the previous month as consumers adjust to elevated mortgage rates that show little promise of easing. The average rate on a 30-year loan stood at 7.22% last week. Consumer confidence is still up 8% year over year.
In addition, fewer Americans believe mortgage rates will decline over the next 12 months, sidelining buyers awaiting affordability improvement.
“Housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction.”
A closer look at mortgage rates
Waning expectations of a rate drop are becoming a common trend.
In the latest survey, only about 1 in 4 Americans believed rates would drop over the next 12 months, a decline from nearly 1 in 3 a month prior. In comparison, at the beginning of the year, almost 40% of survey respondents said they expected rates to fall.
“[Strong economic and job market data] will keep mortgage rates at elevated levels for the near future, sidelining some prospective buyers from entering the housing market,” said Edward Seiler, Mortgage Bankers Association’s (MBA) associate vice president.
With rates hovering around 7% for a 30-year loan over the last few months, monthly mortgage costs have risen. The national median payment rose past $2,200 in March from $2,184 in February, according to the MBA. Payments could become even more expensive going forward as average 30-year loan rates surpassed 7% over the last three weeks, with no signs of falling.
Read more: Mortgage rates top 7% — is this a good time to buy a house?
Home sellers remain optimistic
Contrasting homebuyers’ woes, an increasing number of Americans think now is a good time to sell. The share of survey respondents confident in selling reached nearly 70% in April, up from 60% at the beginning of the year and 62% in the same month last year.
Home sellers’ growing optimism could be attributed to the continual growth in home prices nationwide. The latest national housing price index gained 6.4% in February, according to the S&P CoreLogic Case-Shiller US National Home Price.
“As interest rates go up, people’s purchasing power goes down, and thus, so should home prices. But that hasn’t happened in this latest correction cycle,” Jon Grauman, founder of Grauman Rosenfeld, a real estate firm in Los Angeles, told Yahoo Finance.
Consumers are braced for high prices — more than 40% of Fannie Mae’s survey participants expect home prices to increase over the next 12 months, compared to 37% earlier this year.
“We think consumers’ generally improved sense of home-selling conditions bodes well for listings and housing activity, particularly for the segment of the population who may need to move for lifestyle reasons and have already begun adjusting their financial expectations to the current mortgage rate and price environment,” Duncan said.
Correction: A previous version of this article listed the incorrect firm name for Grauman Rosenfeld. We regret the error.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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Finance of America Companies (FOA), which controls the outgoing brands Finance of America Reverse (FAR) and American Advisors Group (AAG), recorded a net loss under generally accepted accounting principles (GAAP) of $16 million in Q1 2024 and an adjusted net loss of $7 million for the quarter, according to a recently released earnings report.
Total revenues at the company dropped sharply from $276 million in Q4 2023 to $75 million in Q1 2024. Company leaders, however, expressed confidence in their strategic positioning following the completion of the corporate integration of AAG and the recently announced sunsetting of the FAR and AAG brands under the FOA brand, which is expected to go into effect later this year.
Corporate positioning
CEO Graham Fleming said during the earnings call that the company “is well positioned to return to sustained profitability,” particularly due to its leadership position in the reverse mortgage space and a reduced adjusted net loss compared to Q4 2023.
“These results were driven primarily by an improvement in operating performance compared to recent quarters as margin improved and remained strong through the quarter,” Fleming said. “On an adjusted basis, in the first quarter, we recognized a net loss of $7 million or $0.03 per fully diluted share. This is a 65% improvement from the net loss of $20 million or $0.09 per fully diluted share in the fourth quarter.”
Higher revenues and lower costs helped to drive this improvement, he explained, and loan origination revenue went up despite a slight loss in volume.
“During the quarter, reverse volumes were down only 3% to the prior quarter as previously guided,” he said. “However, improved margins led to a $5 million increase in revenue in our originations platform. Our net balance-sheet markup due to outside factors was minimal for the quarter as spread tightening and home price appreciation improvements offset an increase in interest rates.”
The company is eyeing a 10% increase in origination volume for Q2 2024, estimating the volume from April through June at somewhere between $465 million and $500 million, Fleming said.
AAG integration ‘complete’
FOA President Kristen Sieffert provided an operational update for the company, saying that “much of our previously communicated work to streamline our operations is now behind us and the integration of AAG’s platform is complete.”
Early this year, the company finalized its transition plans to bring both FAR and AAG personnel onto a single loan origination system (LOS), which Sieffert said was the “last step in the full integration process.” Completing it now allows the company to continue with the next phase of its “go-to-market strategy,” which the brand unification will help to facilitate.
A unified brand will serve to “optimize and maximize” the company’s resources and reach, including the discontinuation of the AAG and FAR brands, which are expected to take place in early Q3 2024. Modernizing the company’s digital capabilities is also a priority, she said, and there has been interest in the company’s wholesale partnerships program from “traditional mortgage lenders and servicers,” with a focus on FOA’s proprietary second-lien product within the “HomeSafe” product catalog.
“In March, we expanded the reach of this product through a leading broker-facing platform and approved the product to be offered through our principal agent channel, giving partners more flexibility in how they bring the product to market,” Sieffert said. “Following the launch of the most recent loan origination system, we’ve seen interest in the product grow to over 6% of our overall submission volume.”
Retirement solutions, debt maturity
The company’s retirement solutions division produced “strong top-line revenues” of $46 million in Q1 2024, according to chief financial officer Matt Engel.
“As expected, funded volumes were modestly down from the fourth quarter as we completed the LOS consolidation,” Engel said. “However, revenue margins for the segment equated to 10.8% or a 17% increase over the fourth quarter. This is due to spread tightening across our suite of products, leading to improved margins. Expenses decreased from the prior quarter as the company continues to align our infrastructure to our current business model.”
Engel also addressed high-yield debt on the company’s balance sheet that is currently scheduled to mature in November 2025.
“We are moving proactively to review our options and holding productive conversations with the necessary parties to identify an optimal path forward,” Engel said. “While it is premature to discuss specifics, we are encouraged by the early conversations.”
Product interest
In a Q&A session following the main segment of the call, FOA leaders were asked about products that seem to be garnering the most demand from consumers. Sieffert quickly pointed to HomeSafe Second.
“With the HECM product and the regular HomeSafe product, as the rates rise, the LTVs are compressed a little bit. We don’t have that dynamic on the HomeSafe Second,” Sieffert said. “And so it’s freeing up more capital for people to access the cash that they need.
”We see that as one of the bigger growth opportunities for us — especially in conversations with larger traditional mortgage bankers and servicers that have portfolios of products — that borrowers are looking for different solutions that the traditional products just aren’t filling the needs right now.”
Engel also alluded to a potential securitization of HomeSafe products in the range of $300 million in future quarters.
It was an action-packed week for the housing and mortgage market. Wednesday’s Fed announcement was the highlight, but we also got several economic reports that caused rate volatility. Thankfully, it was mostly the good kind.
The week got off to a slightly stronger start with Monday’s only major rate news being updated borrowing estimates from the Treasury Department. Why would such a thing matter?
Treasuries largely dictate day to day interest rate momentum in the U.S. because they are abundant, simple, and as close to risk-free as it gets. As such, Treasuries are the universal yardstick for all other debt in the U.S., including MBS, the mortgage-backed securities that have the most direct impact on mortgage rates. This is why Treasury yields and mortgage rates correlate so well over time.
Treasuries can take cues from several sources. One of the biggest is the change in the outright level of supply. In other words, how much more debt is the U.S. government issuing in the upcoming quarter? If that number is higher than expected, it puts upward pressure on rates. Monday’s news from Treasury was fairly palatable and roughly in line with market expectations, which allowed rates to stay steady.
Things changed on Tuesday when the Employment Cost Index (ECI) data came out. This is one of several reports that the Fed has mentioned as being important to the rate outlook recently. Higher numbers mean higher rates, all other things being equal. This week’s installment showed Q1 costs at 1.2, up from 0.9 in Q4 and well above the market consensus of 1.0. Rates hit the highest levels of the week as a result, both in terms of Treasury yields and mortgage rates.
Things changed on Wednesday. The morning economic data did no harm, but didn’t necessarily deserve much credit for turning things around. Those honors went to the Fed Announcement in the afternoon–specifically: Fed Chair Powell’s press conference.
Markets already knew the Fed wouldn’t change rates at this meeting, so the focus was likely to be on Powell anyway. Expectations were more varied as to how he might address the recent inflation data, but we knew he’d have to be less convinced than last time when it comes to 2024 rate cut prospects.
Unsurprisingly, Powell acknowledged that what had looked like one month of noise earlier in the year was now an undeniable and unwelcome shift in progress toward lower inflation. Nonetheless, he expects progress to get back on track in the coming months and for the Fed’s next move to be a cut instead of a hike.
Markets also appreciated his clarification on political matters. Many analysts have suggested the Fed won’t be able to cut rates until December because it risks looking like a political move if it happens before November’s election. But Powell was clear in saying the Fed would take whatever monetary policy action it deemed appropriate whenever the data suggested it. In other words, if inflation were to begin falling in a more meaningful way in the next several months and if the economy began to falter, we would not have to wait several more months for the Fed to deliver some rate relief.
With that, momentum had shifted in favor of lower rates for the week. There was some follow-through on Thursday, but even better gains on Friday after the latest monthly jobs report came out weaker than expected. Job creation fell to its lowest level since October, and that’s in line with the lowest since covid lockdowns. It was also well below the forecast consensus (175k versus 243k).
Historically, 175k is a solid number, but everything’s relative. Rates typically fall when the job count undershoots the forecast by that much and Friday was no exception. 10yr Treasury yields and mortgage rates ended the week at the lowest levels since April 9th. Traders further lowered their outlook for the end-of-year Fed Funds Rate, once again pricing in at least one full cut this year.
On the housing data front, the week’s most notable releases were the two leading national price indices from FHFA and Case Shiller. Both were much higher than forecast for the month of February, showing annual growth of 7.0% and 7.3% respectively.
From here, the calendar is comparatively much more quiet until the biggest economic report of the month on April 15: the Consumer Price Index (CPI). This is the broad inflation index that has been at the scene of many crimes against the world of interest rates. Reactions have been big enough that it’s not uncommon to see rate momentum fizzle sideways as traders wait for the next inflationary shoe to drop.
Mortgage rates eased slightly last week after a cooler-than-expected jobs report. Additionally, the 10-year Treasury yield fell after Friday’s jobs report.
HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.51% on Tuesday, slightly below the rate of 7.57% one week ago. At the same time one year ago, the average rate was 6.54%.
The 15-year fixed rate averaged 6.77% on Tuesday, down from 6.79% one week earlier.
“The labor market has always been my key variable for lower rates, and last week’s headline jobs number missed, while wage growth came in cooler than anticipated,” HousingWire lead analyst Logan Mohtashami said. “However, the other critical labor data are getting softer, such as job openings data and job openings quit rate. The Fed really follows the job openings quit rate as it’s a measure of labor tightness, and it is below COVID-19 levels.”
As of May 3, there were just under 600,000 single-family homes on the market, up 33% from last year, according to data from Altos Research. The available supply of unsold homes is rising and is likely to continue growing through the summer, according to Mike Simonsen, founder and president of Altos Research.
“In a few weeks, we expect the market will have more homes available than at anytime in the past three years,” Simonsen wrote on Monday. “By the end of the summer, it looks like inventory will finally be back above 2020 levels. But it’ll take several more years of elevated mortgage rates before inventory builds back to pre-pandemic levels of 2019 or earlier.”
Between April 26 and May 3, however, inventory only ticked up by 1%, rising from 556,291 to 559,744. Simonsen expects to see 700,000 homes on the market before the typical seasonal decline takes hold in the fall.
My model for inventory growth with higher mortgage rates came crashing down last week. After two weeks of significant increases, inventory growth slowed dramatically and is far from my 11,000-17,000 growth model with mortgage rates over 7.25%. Did the recent dip in mortgage rates play a role here or is this the average choppy weekly data we have seen in past years? Let’s delve into the weekly data to see what we can uncover.
Weekly housing inventory data
I was looking for a hat trick this week after higher mortgage rates fueled more inventory growth, but that stalled out last week. It’s important to note that the weekly data can be volatile, so I won’t overreact to one week of slow inventory growth data, but it was disappointing to see just 3,453 homes added. Last year, during this same timeframe, inventory fell week to week as well, so always remember that a trend is more important than one week’s data. Note that we do have Mother’s Day weekend next week.
Weekly inventory change (April 26-May 3): Inventory rose from 556,291 to 559,744
The same week last year (April 28-May 5): Inventory fell from 421,924 to 420,489
The all-time inventory bottom was in 2022 at 240,194
The inventory peak for 2023 was 569,898
For some context, active listings for this week in 2015 were 1,081,867
New listings data
New listing data has been a positive story all year, as we have seen consistent growth from 2023 levels, which saw the lowest recorded levels of new listings ever. I wish new listings were growing faster, but I will call it a victory nonetheless. We saw a slight decline in new listings data week to week. For now, I will chalk this up to the seasonal choppiness we sometimes see with inventory data. Here’s the new listings data for last week over the last several years:
2024: 70,954
2023: 57,682
2022: 76,095
Price-cut percentage
In an average year, one-third of all homes take a price cut — this is standard housing activity. When mortgage rates increase, demand falls and the price-cut percentage grows. When rates drop and demand improves, the percentage falls.
The price-cut percentage growth in 2024 is much slower than in 2022, when rates spiked more aggressively. The second half of 2022 had the biggest and fastest decline in home sales ever, and after November of 2022, the epic home sales crash stopped. This can explain why the slope of the price-cut curve was faster and stronger in 2022 than in 2023 or so far in 2024.
2024: 33%
2023: 29%
2022: 20%
10-year yield and mortgage rates
We had an exciting week with the 10-year yield and mortgage rates. The Federal Reserve tried to maintain a balanced stance on when the next rate cut would happen, which I talked about in this HousingWire Daily podcast.
Then, the 10-year yield fell after the jobs report showed that wage growth slowed. I wrote about the wage growth slowdown and how that ties into the Fed’s model in my analysis of the jobs report. Looking at all of these factors — the Fed meeting points, the softness in job openings and the jobs Friday data — can explain the decline in yields and mortgage rates last week.
Mortgage spreads have been terrible for some time now, but 2024 is far from the peak stress we saw in this data line in 2023. If we were at the same level as the worst spreads in 2023, mortgage rates would be 0.52% higher currently. So, the spreads getting better this year is a positive storyline. I hadn’t anticipated we would see this until the Fed starts cutting rates, so I got this wrong in 2024.
Purchase application data
Purchase application data didn’t move much again last week, down 2% week to week and 14% year ove year. Remember, for any growth we see in this data line in the future, context is critical since we’re working from the lowest levels ever.
Since November 2023, when mortgage rates started to fall, we have had 11 positive prints versus nine negative prints and two flat prints week-to-week. Year to date, we have had five positive prints, nine negative prints, and two flat prints.
The week ahead: Bond market digestion
This week we have a light week on the economic front with jobless claims data, used car prices and some Fed presidents talking. I will be watching the 10-year yield closely. Whenever you have jobs week combined with a Fed meeting, the bond market action can act wild, so I am interested to see how the market reacts after digesting what happened last week.
Have you ever wondered, “Should I move to Reno, NV?” Known as “The Biggest Little City in the World,” Reno is famous for its vibrant nightlife, world-class entertainment, and thriving arts and culture scene. Residents enjoy easy access to Lake Tahoe, as well as a wide range of outdoor activities like hiking, skiing and water sports. From the neon lights of its famous casinos to the serene parks and rivers that crisscross the city, Reno offers a unique mix of excitement and tranquility that’s hard to find anywhere else. In this article, we’ll breakdown the pros and cons of living in Reno to help you decide if it’s the right place for you. Let’s go.
Reno at a Glance
Walk Score: 40 | Bike Score: 52 | Transit Score: 24
Median Sale Price: $550,000 | Average Rent for 1-Bedroom Apartment: $1,400
Reno neighborhoods | Houses for rent in Reno | Apartments for rent in Reno | Homes for sale in Reno
Pro: Excellent arts and culture scene
Reno is often overshadowed by its glitzy neighbor Las Vegas. However, this city boasts a surprisingly vibrant arts and culture scene of its own. The annual Burning Man festival, while held in the Black Rock Desert, leaves a lasting impact on Reno’s local culture, with numerous art installations and events throughout the year. The city is also home to the Nevada Museum of Art. This museum showcases a wide range of exhibitions and is the only accredited art museum in the state. Additionally, the Midtown District is bursting with murals, galleries, and boutiques, making Reno a hidden gem for art lovers.
Con: Air quality concerns
Reno faces significant air quality issues, particularly during the summer months. This is when wildfires in the region can cause smoke and particulate matter to blanket the city. This not only obscures the beautiful views of the surrounding Sierra Nevada mountains, but can also pose health risks to some residents. The city’s location in a valley further exacerbates these issues. Pollutants can become trapped, leading to days or even weeks of poor air quality.
Pro: Proximity to outdoor recreation
One of Reno’s most appealing aspects is its proximity to a plethora of outdoor recreational activities. Located just a short drive from Lake Tahoe, residents and visitors can enjoy world-class skiing, snowboarding, hiking, and water sports within a 45-minute drive from the city. The Truckee River, which runs through the heart of Reno, offers kayaking, fishing, and even a whitewater park for enthusiasts. This easy access to diverse landscapes makes Reno an ideal location for outdoor adventurers.
Con: Limited public transportation options
Reno’s public transportation system struggles because of its limited routes and infrequent schedules, particularly in the evenings and on weekends. With a Transit Score of 24, it can be difficult for those without personal vehicles to navigate the city efficiently. The reliance on cars contributes to traffic congestion and environmental concerns, highlighting a need for improved and more sustainable transportation options.
Pro: Growing culinary scene
Reno’s culinary scene has been experiencing a renaissance. Recently, there’s been an influx of new restaurants, bars, and cafes opening their doors to the public. From food trucks offering gourmet options to high-end dining experiences featuring locally sourced ingredients, Reno has begun to establish itself as a foodie destination. The city also hosts several food festivals throughout the year. These events celebrate everything from craft beer to international cuisine, further cementing the city’s status as a culinary hotspot.
Con: Housing market pressures
With Reno’s rising popularity and influx of new residents, the housing market has become increasingly competitive and expensive. Home sale prices are about $100,000 more than the national average and rents have risen sharply. This lack of affordability can make it challenging for some homebuyers to find affordable housing options within the city, contributing to a growing concern over the cost of living in Reno.
Pro: Educational opportunities
Reno is home to a major public research university, the University of Nevada, Reno (UNR). The university offers a wide range of undergraduate, graduate, and doctoral programs. UNR is particularly renowned for its research and education in environmental science, engineering, and journalism. The presence of the university contributes to the city’s community and provides numerous educational opportunities for residents looking to advance their careers or pursue higher education.
Con: Seasonal weather extremes
Reno experiences a high desert climate, which means residents must prepare for hot summers and cold winters. The temperature can soar above 100°F during the summer months. Making outdoor activities uncomfortable or even dangerous without proper precautions. Conversely, winters can be harsh. Temperatures often drop well below freezing and there’s occasional heavy snowfall, particularly in areas closer to the Sierra Nevada mountains. These seasonal extremes can be a drawback for those not accustomed to such variability in weather.
The sense of community in Reno is strong, with local soften coming together to support local businesses, arts, and charitable causes. The city hosts numerous community events throughout the year, including farmers markets, art walks, and cultural festivals, which foster a sense of belonging and civic pride. This community spirit is a testament to Reno’s resilience and the warm, welcoming nature of its people, making it a great place to call home.
Con: Water scarcity
Reno, situated in the high desert, faces challenges related to water scarcity. The region’s limited water resources are under pressure from population growth and prolonged drought conditions, which can affect water quality and availability. Efforts to manage and conserve water are critical, but the ongoing concerns about sustainability and the impact of climate change make water scarcity a significant issue for Reno’s future.
Pro: Tax benefits
One of the financial advantages of living in Reno is Nevada’s favorable tax structure. The state does not impose an income tax, which can result in significant savings for residents, especially when compared to neighboring states with higher tax rates. Additionally, Nevada’s overall tax burden is relatively low, including property taxes, making Reno an attractive option for both individuals and businesses looking for a tax-friendly environment.
Jenna is a Midwest native who enjoys writing about home improvement projects and local insights. When she’s not working, you can find her cooking, crocheting, or backpacking with her fiancé.
The average for a 30-year fixed-mortgage is 7.34% today, up 0.02% over the last week. The average rate for a 15-year fixed mortgage is 6.74%, which is a decrease of -0.02% from the same time last week. For a look at mortgage rate movement, see the chart below.
Because inflation data hasn’t been improving, the Federal Reserve has been pushing off rate cuts. Though mortgage rates could still inch down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.
Today’s average mortgage rates
Today’s average mortgage rates on May. 06, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
What is a good mortgage type and term?
Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 7.34% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
Today, the average rate for a 15-year, fixed mortgage is 6.74%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 6.74% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
What should I know about mortgage rates today?
Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.
Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Will mortgage rates drop this year?
Most housing market experts predict rates will end the year between 6% and 6.5%. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. The central bank could start lowering interest rates in the fall, but it will depend on how the economy fares in the coming months.
Mortgage rates fluctuate for many reasons: supply, demand, inflation, monetary policy, jobs data and market expectations. Homebuyers won’t see lower rates overnight, and it’s unlikely there will ever be a return to the 2-3% mortgage rates we saw between 2000 and early 2022.
“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.
Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
How can I get the lowest mortgage rates?
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
The National Association for the Self-Employed’s membership has grown dramatically over the last few years, says Keith Hall, the group’s president and CEO. And while that growth has slowed since its COVID-era peak in 2022, he thinks flexible work is here to stay.
The boom in self-employment started when “a lot of people had to do it because of COVID. They didn’t choose to do it; they had to do it,” Hall says. “Many others saw and learned and read that you can do this. You don’t need to be tied to the desk in corporate America.”
Below is NerdWallet’s 2024 list of the 10 best U.S. metro areas for freelancers and the self-employed. Our analysis used recent metro-area data from the U.S. Census Bureau and state-level data from the Tax Foundation. The top metro areas are those where a significant percentage of the workforce is self-employed already, rent is relatively affordable, unemployment is low, worker mobility is high and state income taxes are relatively low.
Smart money moves for your business
Grow your small business with tailored insights, recommendations, and expert content.
Top 10 metro areas for freelancers and the self-employed
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Key findings
Of our top 10 cities, Bridgeport-Stamford-Danbury, Connecticut, and North Port-Bradenton-Sarasota, Florida, have the largest percentages of the workforce that are already self-employed (8.5% and 8.2%, respectively). The median of all metro areas in our dataset is 5.3%.
Housing affordability continues to benefit communities like Chattanooga and Knoxville, Tennessee; Lancaster, Pennsylvania; and Portland, Maine — all places in which more than half of renters spend less than 30% of their income on rent.
Tennessee, Florida and Texas all have no state income tax, which can keep a portion of income in self-employed workers’ pockets. That said, “It’s rare when I personally hear an individual relocating states just because of the tax code,” Hall says.
Columbus, Ohio, was boosted by a significant increase in the number of people moving to the city for work between the end of 2022 and the beginning of 2023. While those people weren’t necessarily freelancers, we use this data point to better understand economic vibrancy.
Identify your self-employment goals when considering a move
What might self-employment look like for you? That depends on what you hope to get out of it.
1. Desired industry
Though some industries have shifted broadly toward remote work, others still benefit from proximity.
Brian Rood, a certified financial planner and owner of Artisan Financial Planning, knows that firsthand: He spent 27 years playing trumpet in the Kansas City Symphony before shifting to financial planning and now works primarily with artists.
In highly specialized fields like the performing arts, “you really do go where the work is,” Rood says. That might mean an industry-specific location, like New York or Los Angeles, or a small city where you landed an orchestra job and then built a network of students and professional contacts.
Seth Hodes, co-founder and managing partner at Able Wealth Management, also works primarily with artists and creatives. He says his clients often move from creative agencies to tech companies to freelance portfolios and then back again based on what opportunities arise. Living in regions that have active job markets and lots of opportunities in their industries helps facilitate such mobility.
“The artist freelancer has always been adaptable,” Hodes says. “It’s a grind out there — you’re going to have to survive and work up a certain kind of cultural capital.”
2. Financial goals
Self-employed workers typically need to set aside 25% to 30% of their income for tax payments.
Next, Rood adapts the 50/30/20 budget to each client; the budget is a framework that recommends spending 50% of your income on expenses, 30% on “wants” and 20% on savings. “It’s a little high on the first parts and a little low on the savings,” he says, but it’s a useful jumping-off point.
Rood encourages self-employed clients to have a larger-than-average emergency fund. For some performing artists, he recommends six to 12 months of living expenses.
That math can get difficult when the cost of living is high, and it can tempt people to move, especially if they can take work with them or are scaling back on hours.
When his clients leave a high-cost-of-living city, Rood says, “it’s because they either are going to retire, and so they want to go somewhere cheaper and they don’t need the work, or the rat race is too much and they want to do something else.”
Hall says he’s seen lots of older Americans strike out on their own, too. If your freelance work is a transition step out of full-time work, you may lean toward the place where you want to spend your retirement.
3. Identity, safety and values
Self-employment can afford you the freedom to live in a place for personal reasons, not just professional or financial ones.
For some, self-employment may support a move that lets them live more safely. According to a 2022 survey from the National Center for Transgender Equality, 5% of trans people had moved out of state due to laws targeting their community and 47% of respondents had thought about it.
And Hall says family ties and hometown memories are common reasons for relocation.
“We do hear a lot from NASE members and from small-business owners moving to a different community,” Hall says. “Maybe they grew up in a small city when they were younger and they had the need to go to the big city, because that’s where the jobs were. Now they’re going back home.”
Hodes says he works with his clients to find harmony between their financial goals and how they want to live their lives more broadly.
“You have to plan for the future, but it has to be a balance,” Hodes says. “Don’t sacrifice too much in the present.”
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Methodology
To create the Best Cities for Freelancers and Self-Employed Workers 2024 list, NerdWallet pulled data for major U.S. metropolitan areas from the U.S. Census Bureau. We also pulled state tax rates from the Tax Foundation and calculated the tax rate for a household earning the median U.S. household income. We weighted the impact of each factor depending on how important we felt that factor would be in the potential financial success of a freelancer. We excluded metro areas for which there was negative or no Job-to-Job Flows Census data.
NerdWallet’s analysis includes data from the following sources:
U.S. Census 2022 American Community Survey data for the unemployment rate, percentage of people in Census-designated metro areas who identified as self-employed in non-incorporated businesses, and percentage of renters in a Census-designated metro area who spend less than 30% of their household income on rent.
U.S. Census Q4 2022 and Q4 2023 Job-to-Job Explorer data.
The 2024 state tax rate for the median U.S. household (which earned $74,580 in 2023, according to Census data), according to the Tax Foundation.
Mortgage Bankers Association vice president and deputy chief economist Joel Kan said the report indicated “a little less strength than expected,” and said the slowdown would likely ease upward pressure on service sector inflation. Payroll employment increases by 175,000 in April; unemployment rate changes little at 3.9% https://t.co/ZwrVfLviqL #JobsReport #BLSdata — BLS-Labor Statistics (@BLS_gov) May 3, 2024 … [Read more…]
So where does this leave us? Let’s look at my labor economic model that started on April 7, 2020, and see where are we today.
1. The current state of the labor market results from a series of events, with COVID-19 being a significant catalyst. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. During the early stages of the labor market recovery, when we observed weaker job reports, I remained steadfast in my belief that job openings would reach 10 million in this recovery. Despite the unexpected job report in May 2021, I was confident in the recovery trajectory. Job openings reached as high as 12 million and are now at 8.5 million. Today the labor market is less tight, but the Fed would love to see this number even lower, down to 7 million.
Currently, the job opening quit percentage and hires data are below pre-COVID-19 levels. We are getting closer to having a single handle on this data, which, when coming from an elevated level, means any Fed member talking about a tight labor market is smoking some good stuff.
3. I wrote that we should get back all the jobs lost to COVID-19 by September 2022. This would be a speedy labor market recovery but it happened right on schedule.
4. This is the key one right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, based on the job growth rate in February 2020. Today, we are at 158,286,000. This is vital because given this level, job growth should be cooling down now. We will be more in line with where the labor market should be when the average is 140,000 to 165,000monthly.
Today’s job print of 175,000 is still above my target level for where jobs should be and we are getting closer to that 159 million total nonfarm payroll number. I will be shocked if we are still trending above 165,000 per month once we break over 159 million total employed people. With that said, the labor market is still outperforming my model.
Looking at the six-month average of job-growth data, we are running at 242,000, even with all the revisions. I am still above my 165,000-per-month level, but we are heading in that direction.
From BLS: Total nonfarm payroll employment increased by 175,000 in April, and the unemployment rate changed little at 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
Less than a high school diploma: 6.0%
High school graduate and no college: 4.0%
Some college or associate degree: 3.3%
Bachelor’s degree or higher: 2.2%
A critical part of this report is that wage growth is cooling down, which is key to many of the Federal Reserve’s concerns. The Fed likes a 3% wage growth trend because they believe productivity is 1%. As you can see below, wage growth is continuing to head in that direction.
We now have multiple data lines that show the labor market isn’t as tight as it once was. The Federal Reserve is now considering this since they have been talking more about their dual mandate as opposed to just being a single mandate Fed. This is positive for mortgage rates because once they pivot, we can see a more sustained move lower in rates instead of what we have had to deal with since 2022. We still have some work to get wage growth back down to a 3%-3.5% level, but it’s at least heading that way.