Nebraskans' Strong Savings Habits Ease Path to Homeownership Despite Inflation

Nebraskans are saving more money than most Americans, which could make it easier for them to buy their first homes. According to an analysis by John McCoy, an associate economist at the Omaha branch of the Federal Reserve Bank of Kansas City, the average Nebraskan earned $64,000 after taxes in 2024 while spending only $54,000 a year. This gap between income and consumption has been nearly double the national average in recent years, suggesting that Nebraskans have a stronger ability to save.

The ability to save is crucial for first-time homebuyers, especially given the recent rise in mortgage rates. Thirty-year fixed-rate mortgage rates have topped 7% for the first time in years, driven by inflation stemming from global events. While median home prices in Nebraska have risen, the increases have been slower than in other states, with larger price hikes occurring after 2022.

According to Zillow, the median home price in Nebraska is $280,673, which would require a 20% down payment of slightly more than $56,000. Nationally, a first-time buyer would need to save for 15 years to reach this amount, but in Nebraska, that time would be around six years due to higher savings rates. For those qualifying for a 10% down payment, the saving period would be about four years.

However, McCoy cautioned that the data analysis is limited by averages. About one-third of Nebraska households make less than $50,000 a year, making savings difficult. Additionally, about 250,000 Nebraskans are renters who might not have the means to save enough to become homeowners. Despite these challenges, McCoy noted that Nebraska's more moderate home prices and higher savings rates make the first home purchase more affordable compared to other places in the country.