NerdWallet Homebuying Climate Index

Each month, the NerdWallet Homebuying Climate Index puts a single number — and a familiar weather label — on how favorable conditions are for home buyers. For July, our analysis of current data puts the Climate Index at 54.2 out of 100, keeping the index in Partly Cloudy territory for the 48th straight month as most variables hold relatively steady.NerdWallet's Homebuying Climate Index combines five indicators linked to homebuying activity: mortgage rates, home price growth, disposable income, unemployment and building permits. Below, we break down what's affecting recent conditions, how today compares with the past three decades and what it means if you're weighing whether to buy.What's affecting July's Homebuying Climate Index?🏦 Mortgage rates: How much are buyers paying in interest?Source: Freddie Mac Primary Mortgage Market SurveyLower mortgage rates make borrowing more affordable, so they're weighted heavily in our Climate Index — if mortgage rates move down, that will quickly push the Index toward Sunny. Unfortunately, that's not what's happening this month.Mortgage rates averaged 6.49% in June, according to Freddie Mac’s weekly survey. And July’s average mortgage rate has reached 6.51% — the highest in nearly a year. And we don’t expect much improvement in the short term. As conflict in the Middle East drags on, that puts upward pressure on oil prices, which means inflation and mortgage rates are likely to stay elevated.🏠 Home price growth: Is the housing market healthy enough to support ongoing price appreciation?Source: Federal Housing Finance Agency We track the FHFA’s Home Price Index and record month-over-month changes, with positive motion pushing the Climate Index upward. You might think higher home prices are automatically bad for potential buyers, but we look at this variable as an indicator of a healthy, active housing market: Is demand strong? Are sales brisk enough to create some competition and encourage sellers to list? And are buyers confident that home values won’t fall right after they buy?While home price growth has slowed from the fast-appreciating months of 2021-2022, we’re still seeing mostly positive month-over-month numbers this year. Still, any upward movement has been small, meaning this variable’s positive impact on the Index is limited.💵 Real disposable income: Is income beating inflation, such that buyers have available cash?Source: U.S. Bureau of Economic AnalysisAn increase in real disposable income means people have more money left to spend or save after taxes (adjusted for inflation). We track this variable as a month-over-month change. Though it tends to move in a narrow range, income growth means take-home pay will stretch further — toward a down payment or mortgage payment, for example.Positive momentum for incomes, especially relative to inflation, can help improve the climate for homebuying. That’s what we’re seeing now, though the upward movement in recent months has been relatively small — so this variable isn’t really boosting our Index.💼 Unemployment rate: How strong is the job market, from the perspective of home buyers?Source: U.S. Bureau of Labor StatisticsIf more people are steadily employed, more people are likely to qualify for a mortgage and feel confident committing to one. A low unemployment rate will strengthen our Climate Index.That’s what we’re seeing currently. Even though you might be hearing stories of layoffs or know people who are having a hard time looking for work, the labor market is broadly holding up — especially from a historical perspective. The most recent unemployment rate of 4.2%, released July 2, is doing a lot to prop up the Index this month.🏗️ Building permits: Are home builders planning to add to the home supply?Source: U.S. Census Bureau and U.S. Department of Housing and Urban DevelopmentAs builders are approved to build more homes, that means more homes will likely be for sale in the months ahead. If permits increase, that has a positive impact on our Climate Index, since buyers will have more options and less competition.The most recent permit data, released in July, shows a slight drop over the past couple months, with building permits still depressed from recent highs in 2022. At that level, permits aren’t necessarily hurting the Index, but they’re not exactly helping either.How has the Index moved over time?Since the datasets we're tracking have a long history, you can see how the current moment compares to highs and lows over the past 30+ years.☀️ All-time high: Sunny (89.5) in March 2021In early 2021, unemployment was declining from its pandemic peak, as mortgage rates remained low and disposable income increased quickly due to COVID stimulus payments. Building permits were also moving upward from pandemic lows, and home prices were appreciating quickly as the market gained steam.☁️ All-time low: Overcast (30.9) in April 1991At this period in the early '90s, mortgage rates were hovering around 9.5%, unemployment was rising, and building permits were low. Though disposable income was showing slight gains, home prices were barely budging, signaling a stagnant market.What does the Index NOT represent?NerdWallet's Homebuying Climate Index is built from public, national-level data — it doesn't account for market variations by geographic region, and it can't consider how your household's finances compare with the national picture. Think of it more as The Weather Channel's big U.S. map, not the hourly forecast for your zip code.National statistics can only go so far in helping you decide whether it's a good time to buy a house. The best time for you will always depend on your financial and personal readiness. And even though we have the historical data at a glance, don’t get caught up in worrying that the best time is behind you. (Do I wish I’d bought three houses in 2021? Sure. Would that have been financially feasible? Definitely not.)If you’re curious about how the math could play out for your situation, our experts created the best resources to help you get started:Isabella Angelos and Johanna Arnone contributed graphic design support to this project. Some of these graphics were created using HTML code written with the assistance of AI, and all have been reviewed by our editorial team for accuracy and quality. INDEX METHODOLOGYNerdWallet's Homebuying Climate Index is a composite index, updated monthly to represent the latest federal data on five economic indicators: mortgage rates, home price growth, disposable income, unemployment, and building permits.Our data sources and variable weights are as follows:35%: Mortgage rates (Freddie Mac Primary Mortgage Market Survey, 30-year fixed rate)20%: Home price growth (Federal Housing Finance Agency House Price Index, month-over-month change)20%: Real disposable income (U.S. Bureau of Economic Analysis, month-over-month change)15%: Unemployment rate (U.S. Bureau of Labor Statistics)10%: Building permits (U.S. Census Bureau and U.S. Department of Housing and Urban Development)These weightings are editorial judgments informed by the hierarchy established in Dua, Miller, & Smyth (1999) , where mortgage rate is the dominant predictor and building permits function as a leading indicator of homebuying activity. We scale each variable scaled on a range of 0-100, relative to the historical minimum and maximum for that variable looking back to 1991.Each of the five weighted scores are summed into a single Index value from 0-100 and then mapped to a corresponding climate label:☀️ Sunny (80–100)🌤️ Mostly Sunny (60–79)🌥️ Partly Cloudy (40–59)☁️ Overcast (20–39)⛈️ Stormy (0–19)Article sourcesArticle sourcesNerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.1.Freddie Mac Primary Mortgage Market Survey. 30-year Fixed-Rate Mortgage. Accessed Jul 30, 2026.2.FRED, Federal Reserve Bank of St. Louis. U.S. Federal Housing Finance Agency, Purchase Only House Price Index for the United States [HPIPONM226S]. Accessed Jul 28, 2026.3.FRED, Federal Reserve Bank of St. Louis. U.S. Bureau of Economic Analysis, Real Disposable Personal Income [DSPIC96]. Accessed Jul 30, 2026.4.FRED, Federal Reserve Bank of St. Louis. U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE]. Accessed Jul 2, 2026.5.FRED, Federal Reserve Bank of St. Louis. U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units [PERMIT]. Accessed Jul 24, 2026.6.The Journal of Real Estate Finance and Economics . Using Leading Indicators to Forecast U.S. Home Sales in a Bayesian Vector Autoregressive Framework. Accessed Jun 10, 2026.