Is Now a Good Time to Buy a House?

The rapid changes in mortgage rates have many potential home buyers wondering: is now a good time to buy? Will prices rise or fall? Will mortgage rates and affordability improve or worsen?

Of course, there is no ‘perfect’ time to buy. But there are specific factors home buyers should consider when determining their timing.

Patricia Maguire-Feltch, director of consumer products sales at Chase home loans, says that realistic evaluation is critical when making the big move to buy. “The home buying process can be overwhelming and the biggest barrier for many is a lack of knowledge about the process…[but] “While the market may seem intimidating right now, it may still be the right time for financially well-prepared buyers to purchase their own home,” she said. “Potential buyers who have recently experienced a loss of income or a change in financial status may need to reevaluate their financial readiness for homeownership.”

Whether buying a house at this time is a good decision obviously varies greatly by location. Nationally, house prices will rise by 5% in 2024 compared to the previous year, the newspaper said Alto’s research Founder Mike Simonsen. The number of homes sold this year is historically low and with 27% more unsold homes on the market than last year and a slight increase in the price tag, buyers now have more choice.

HousingWire’s housing market forecast for 2025 Lead analyst Logan Mohtashami and Simonsen expect mortgage rates to remain between 5.75% and 7.25% next year.

This margin is in line with most other housing construction forecasts. Redfin economists expect mortgage rates to stabilize around 7%. So while interest rates aren’t falling to the lows of 3% during the pandemic years, interest rates haven’t gone the other way either. Last fall, mortgage rates reached 8%.

Orphe Divounguy, a senior economist at Zillowhe said he expects interest rates to fall rather than rise. “Affordability will remain a challenge, but signs are showing improvement. More homes for sale, stable rental growth, higher real incomes and mortgage interest rates that are more likely to fall than rise all bode well for potential first-time buyers in the housing market,” he said.

Divounguy also said an easing of interest rates would likely lead to activity. “While more Fed rate cuts are expected, there is no guarantee that mortgage rates will fall, and even if they do, the path will likely be bumpy. Expect more activity during periods when mortgage rates are low,” he said.

Maguire-Feltch points to the positives. “While the mortgage rate environment has been volatile in recent weeks, we are seeing more optimism around the mortgage market, especially on isolated incidents such as when the Fed announces a rate cut,” she said. “If we see further cuts in the coming year, they will likely be slow and gradual. The economy is doing well, and a strong economy is good for the recovery and stability of the housing market.”

Potential buyers hoping for a better deal can’t avoid the prices, data shows. The Federal Reserve Bank of St. Louis“The economic data from the Federal Reserve (FRED) shows that iIn October 2024, the average sales price of homes sold in the United States sat at $420,400.

While that figure seems daunting, average sales prices were higher in 2022 ($442,600) and 2023 ($423,200). Current prices are not far off from 2021 home prices, which were $414,000. And while prices have fallen slightly, there has not been a major decline in national home prices.

The narrative associated with buying is that many borrowers are sitting on the sidelines, and those who bought during the 3% pandemic boom are enjoying their low interest rates — and in no rush to move. “About 70% of mortgage debts currently have an interest rate of less than 5%. If interest rates continue to fall, we will likely see the lock-in effect diminish and consumers will be more willing to buy a home and pay a higher rate than they currently have,” Maguire-Feltch said.

Tenants who want to move?

As home prices continue to rise, the number of renter households has soared, outpacing the growth of homeowners in the U.S. by a record 45.6 million renters. That number has increased by 2.7% year over year. according to Redfin.

Stabilizing rental growth helps current tenants looking to buy save for a down payment. from Roodvin latest rental measures the average American asking rent hardly budged in October. KernLogic reported that single-family home (SFR) prices rose only 2% annually as of September 2024, marking the lowest annual growth rate in more than four years. Rent growth remains well below the pre-pandemic average of 3.5%.