Is Now the Right Time to Buy? Lower Mortgage Rates and More Homes on the Market Signal Opportunity

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Now might be the best time to buy a home, or in the words of Orphe Divounguy, senior economist at Zillow, “This is as good as it gets” for potential homebuyers. While not a very comforting statement, let’s consider why those waiting to pull the trigger might want to get serious this season. 

The main reason to consider buying a home now is the significant decrease in mortgage rates. As of Sept. 27, the average interest rate for a 30-year fixed mortgage is 6.22%. While this is a few points higher than earlier in the month, it's a substantial drop from earlier in the year, when rates were around 7.22%. This decline in rates is a reason for potential homebuyers to feel optimistic. Housing payments have also been on a downward trend, with the median mortgage payment at $2,534 during the four weeks ending Sept. 15, down 2.7% from a year ago.

While housing, in general, continues to be incredibly difficult for the majority of Americans who are looking to buy a home, the past few years have seen a dismal outlook due to the lack of availability, high costs of new construction, market demand against available units, and, of course, high rates. We are seeing a small window of lower mortgage rates, more inventory, and low buyer competition.

The average amount the typical buyer would need to afford a home in the U.S. has fallen slightly by 1% from last year to around $115,000. This 1% decline, while seemingly small, is significant as it represents the first decline since 2020, indicating a potential shift in the housing market.

Another positive sign for potential homebuyers is the increase in the number of homes for sale, with inventory up 22.7% since last year. This increase in inventory should reassure potential homebuyers that they have more options to choose from. 

In addition, a survey by the National Association of Home Builders showed an increase in confidence among those building homes for the market. This increase in confidence could lead to more houses being built, which in turn could increase the supply of homes and lower prices. The number of newly built single-family homes increased, and building costs decreased slightly. 

As the housing market evolves, this shift could offer a rare opportunity for those waiting for the right moment to move. Lower mortgage rates, increased inventory, and easing competition give potential buyers a window of possibility that has yet to be seen in years. While no one can predict the market's future with certainty, seizing the moment now makes your dream of homeownership a reality before the tides shift again.