Here's what's keeping home buyers on the sidelines even as mortgage rates hit a 10-month low

However, in New York City, where Cowan s and works, prices have soared beyond reach."I would love to buy a , that's the next step," said Cowan, a and life coach

But "in New York, the entry in became so much more difficult," she said.In fact, New York notched the highest annual gain of all the metropolises in the Case-Shiller 20-city composite, up 7.4% in May compared to the prior year

The median listing price of a in New York City is now more than $829,000, up 3.8% year over year, according to Realtor.com.More from Personal Finance:Mortgage rates have made a 'substantial imvement'Fewer young adults reach key life, money milestones'Job hugging' has replaced job-hopping, consultants sayIn recent years, rising prices have made it harder for first-time buyers to enter the market nearly nationwide, causing many millennials Cowan to delay that traditional milestone.With record-high prices and limited inventory, even a recent drop in mortgage rates has done little to change that affordability equation. "This is holding back first-time buyers from entering the market," Lawrence Yun, chief economist of the National Association of Realtors, said in a recent statement.The housing affordability blemAcross the country, the median age of first-time owners is now 38 years old, an all-time high, according to a 2024 report by the National Association of Realtors

And first-time buyers currently make up just 24% of the market, the lowest on record, according to NAR

Millennials and Gen Z still believe in the dream of ownership as a wealth-building opportunity and an achievement, said Matt Vernon, head of consumer lending at Bank of America. "It's just taking longer for them."watch now10:2710:27Why so many young adults are still living with their parents and Digital Original Higher mortgage rates have also helped keep first-time buyers on the sidelines

Although mortgage rates fell to their lowest level since October, the average rate for a 30-year, fixed-rate mortgage is still just above 6.5%, according to Freddie Mac — a big leap from the below-3% levels near the start of the pandemic."The American consumer has gotten very used to the low-rate environment that has spanned over a decade," said Bank of America's Vernon.According to Bank of America's buyer insights study, 60% of current owners and spective buyers — a three-year high — said they're unsure whether now is the right time to buy."Not knowing if rates are going to come down or go up is adding to the uncertainty in the marketplace," Vernon said.The housing lock-in effect Where rates could be headed is key.Fed Chair Jerome Powell said at a news conference in July that the Federal Reserve hadn't yet determined whether it would cut its benchmark rate at its September meeting.However, even if the central bank does cut rates, "it's not a guarantee that mortgage rates are going to fall and make housing more affordable," said Ashley Weeks, a wealth strategist at TD Wealth."Mortgage rates are more directly tied to the 10-year Treasury, so it's entirely possible mortgage rates remain flat or even increase regardless of where the Fed moves in September," Weeks said.Still, many believe lower rates will come and that will help ease the housing affordability blem.Roughly 75% of spective buyers expect prices and interest rates to fall and are waiting until then to buy a new , Bank of America also found in its survey of 2,000 adults in March and April. one-third, or 32%, of Americans said they would need mortgage rates to fall below 6% to feel comfortable buying this year, according to another recent report by Bankrate.However, more than half — 51% — of those polled said they wouldn't buy this year at any mortgage rate, a whopping 13-percentage point jump from Bankrate's 2024 survey. to CNBC on YouTube.