Mortgage rates are lower, home prices are easing and there is more supply on the market for sale. All of that adds up to improved affordability for today’s homebuyers. Saving for a down payment, however, is still the biggest hurdle for first-time buyers.

Prices nationally are basically flat compared with where they were a year ago, according to Parcl Labs, which runs daily studies of U.S. home prices. They dipped into negative territory earlier this month and are now just 0.3% higher year over year.

The latest S&P Cotality Case-Shiller home price index, which reflects pricing from October, showed large disparities among metropolitan markets. Of the top 20 markets it highlights, Chicago; New York; and Cleveland had the biggest gains. Meanwhile eight cities showed prices in negative territory, with Tampa, Florida; Phoenix; and Dallas seeing the biggest losses.

“National home prices also continue to lag consumer inflation, as October’s CPI is estimated around 3.1% (based on a provisional index the U.S. Treasury announced due to the federal data shutdown) – roughly 1.8 percentage points higher than the latest housing appreciation. In real terms, that gap implies a slight decline in inflation-adjusted home values over the past year,” explained Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, in a release.

Mortgage rates, too, are coming down.

The average on the 30-year fixed mortgage is currently at 6.19%, according to Mortgage News Daily. It started this year well over 7%. That decline means significant savings for homebuyers.

For example, for a buyer putting down 20% on a $410,000 home (right around the national median), the monthly payment today is $200 less on average than it would have been a year ago. Weaker prices and lower rates are changing the math on what first-time buyers can afford.

The typical homebuyer now needs seven years to save for a down payment, according to Realtor.com. That’s down from the recent peak of 12 years in 2022, but still roughly double pre-pandemic levels, partly because the personal savings rate is so much lower than it was in 2020.

Down payments continue to be the biggest hurdle to homeownership, which in the second half of this year fell to 65%, according to the U.S. Census, the lowest level since 2019.

But an improved supply of homes for sale is adding momentum to the market. Active listings are now about 12% higher than they were a year ago, according to Realtor.com, but still 6% lower than they were just pre-pandemic.

And buyers appear to be responding. Pending home sales, which count signed contracts on existing homes, rose more than expected in November. They were 3.3% higher than October, 2.6% higher than November 2024 and hit the highest level in nearly three years, according to the National Association of Realtors.

“Improving housing affordability–driven by lower mortgage rates and wage growth rising faster than home prices–is helping buyers test the market. More inventory choices compared to last year are also attracting more buyers to the market,” said Lawrence Yun, chief economist for the Realtors, in a release.