US Home Prices Are Higher Than Ever: 4 Reasons You Should Wait Until 2025 To Consider Buying a House

According to the National Association of Realtors , the median sales price of existing homes rose to $419,300 in May of this year — that’s almost 6% higher than they were a year prior. Zillow put the average U.S. home value at $362,481, a 3.3% increase over the past year. Regardless of which source you use, or whether you prefer medians over averages, one thing is for sure: Purchasing a home — and the cost of living in general — has never been more expensive.

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It’s not just home prices that make it so hard to afford real estate. Interest rates, insurance premiums and property taxes are also key factors contributing to the excessively high cost of homeownership.

If you’re thinking about buying a home, some experts suggest waiting for a few more months for a few reasons.

Money mistakes the super wealthy never make - that you might be doing now.

Interest Rates Could Come Down

Housing interest rates play a crucial role in housing affordability. As of August 15, the current average interest rate on a 30-year fixed-rate mortgage is 6.49%, the lowest they’ve been in more than a year. It’s also about half a percentage point lower than it was 12 months ago.

Freddie Mac predicts that interest rates will continue to trend downward in the next few months as inflation continues to slow. Assuming this trend continues, buyers could get lower rates by waiting until next year to buy a home.

If rates continue to drop, current homeowners who want to sell their property could also benefit. Those who locked in a low rate before rate hikes have held off on selling for many reasons, one of which is simply the cost of getting a new mortgage. If interest rates level off or take a dip, there could be more homes put on the market as people look to sell and take advantage of the lower cost of home financing.

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There Could Be More Inventory

When it comes to real estate, the law of supply and demand plays a critical role in determining housing prices. The greater the demand and the lower the supply, the more expensive homes tend to be. But the inverse is also true.

“With housing inventory rising throughout 2024, we’ll likely see prices start to decline in 2025. As more homes hit the market and outpace buyer demand, sellers will have to lower their asking prices. We’re already seeing signs of this in Colorado Springs and Denver,” said Andrew Fortune, a realtor and owner of real estate brokerage Great Colorado Homes .

“While there are homes available now, expect a significant jump in inventory next year — potentially 20% to 50% more homes for sale,” Fortune continued. “This means more options for buyers and increased negotiating power. Sellers will be more inclined to accept lower offers in a market flooded with choices. 2025 could be a strong buyer’s market, as long as you can navigate the interest rates at that time.”

Waiting Could Give You More Time To Save for a Down Payment

Simply put, it might be smarter to wait to buy a house if you simply need more time to save up. Things like interest rates, economic stability, housing prices, and inventory can fluctuate all the time. There’s no surefire way to predict what’ll happen going forward.

But what you can do is take this time to get your finances in order — unless you’re already primed to buy right now. If waiting is an option for you, see if you can save up for a larger down payment. Ideally, you’ll have 20% of the home purchase price to eliminate the need for private mortgage insurance (PMI).

You Don’t Have an Emergency Fund

Many experts, like Dave Ramsey , also suggest waiting to buy a house until you have a three to six-month emergency fund and are debt-free. Once you’ve gotten to this point, you could be ready to buy a house. You could also potentially set aside more money for a down payment.

Plus, with a fully maxed-out emergency fund, you’ll be prepared for most financial uncertainties that come your way. This could include something as minor as higher-than-anticipated utility bills at your new house, or it could be something more major like essential home maintenance or a sudden loss of income.

This article originally appeared on GOBankingRates.com : US Home Prices Are Higher Than Ever: 4 Reasons You Should Wait Until 2025 To Consider Buying a House