The housing market has been tough in 2024, with stubbornly high mortgage rates keeping many homebuyers on the sidelines. But in August, a light appeared at the end of this tunnel when rates dropped to yearlong lows—below 6.5% for a 30-year fixed home loan. And with the Federal Reserve signaling a much awaited interest rate cut in September that could cause mortgage rates to tumble further, many homebuyers are wondering: Is now the time to get out there and start home shopping—or should they wait for even lower rates down the line?
Indeed, the expectation is for mortgage rates to fall to 6.3% by the end of the year. This would mean that homebuyers who hold off could stand to save significantly on interest payments. But playing the waiting game comes with risks, and trying to time the market is always a gamble. Ultimately, how long to wait is a highly personal decision based on each buyer’s circumstances.
Once rates drop, in addition to higher prices, there will be way more competition from other buyers.
“It’s easier to purchase a home with less competition now than to go out into the market later and compete in bidding wars, which typically drive up prices,” says Jason Gelios, a real estate agent with Community Choice Realty in Southeast Michigan.
The typical home was on the market for 50 days in July, so many sellers are still accepting lower offers and offering concessions. Once interest rates start decreasing, sellers will be less likely to do that.
For homebuyers who don’t want to wait, one option to consider is to buy now and refinance later. Homebuyers should also keep in mind that current interest rates are still considered quite low, historically speaking. The 30-year fixed mortgage rate reached a peak of 18.4% in October 1981.
“Many homebuyers are making the mistake of waiting to buy based on the unprecedentedly low interest rates we saw during the pandemic,” says Lindsay Fanali, a strategic real estate adviser in Wellington, FL. “But it’s highly unlikely we’ll ever see rates go that low again.”
Or look it at another way: “Unless you live with family, you are renting—and rent is 100% interest,” quips Jennifer Vokolek, a real estate agent at Re/Max DFW Associates in Frisco, TX. “There’s always a better financial time to change jobs, get married, have a baby, and even buy a house. Don’t wait on life, live it.”
Even if you’re not ready to buy until interest rates go down, there are steps you can take beforehand, including finding a local real estate agent to walk you through the process.
“I’m helping my clients prepare by creating a solid game plan,” says Isiah Denman, a real estate adviser with Spears Group at Compass in Santa Rosa Beach, FL. “First, I ensure they get preapproved with a lender.”
Once that happens, he goes over the exact process his clients need to follow once they find a home they’re ready to make an offer on.
