Stable Mortgage Rates Offer Window of Opportunity for Homebuyers

Photo byGetty Images

As we enter the final quarter of 2024, mortgage rates are showing a modest rise, with the 30-year fixed-rate mortgage increasing by just three basis points to an average of 6.19%, according to the National Association of Realtors (NAR). This minimal uptick, compared to the peaks of nearly 8% in late 2023, offers prospective buyers a potentially pivotal moment to secure more affordable financing options.

Stretching the Budget: How Lower Rates Empower Buyers

The significance of this shift becomes clear when examining purchasing power. At the peak of 7.79%, a buyer with a $2,200 monthly budget could afford a home valued around $278,000. Today’s 6.19% rate allows that same budget to stretch to $318,000—a $40,000 increase in buying power. This subtle yet impactful adjustment opens new opportunities for buyers who were priced out during last year’s high-rate environment .

However, experts caution that while current rates are favorable, any further reductions are expected to be modest. Projections suggest that rates might dip slightly into the high fives as we move into 2025. This means that for those waiting for a substantial drop, the current market conditions might be the most advantageous for the foreseeable future .

Inventory on the Rise: A Buyer’s Market in the Making?

For years, one of the housing market’s biggest hurdles has been the lack of available homes. August 2024 marked a turning point with 1.35 million existing homes on the market—the largest inventory seen since fall 2020. This rise in inventory could signal a shift, creating potential leverage for buyers as they navigate their options .

Despite the increase in available homes, the pace of sales remains slow. The NAR’s inventory measurement, the “months’ supply” metric, indicates that it would take 4.2 months to sell through the current inventory at the current sales pace. The last time inventory was this robust, homes were selling much faster, within 2.6 months. This combination of rising inventory and a slower sales pace might just be the leverage buyers need to negotiate better deals .

Price Pressures Remain: The Tug-of-War Between Supply and Demand

Despite the influx of homes, prices remain a sticking point. According to NAR, the median price for an existing home in August 2024 was $416,700—a figure that underscores the stubbornly high prices despite growing inventory. Although economic principles suggest that increased supply should temper prices, the persistent demand continues to support high valuations .

While national averages provide a general view, local markets tell varied stories. For instance, Realtor.com reports that the median list price in Rochester, NY, rose 13% year-over-year, while Miami saw a 12% drop. Such regional disparities highlight the importance of understanding local dynamics when navigating the housing market .

The Bottom Line: Finding the Right Moment

Ultimately, individual circumstances are the most crucial factor when deciding to buy. While market trends play a significant role, the best time to buy is when you find a home that meets your needs in a community where you want to establish roots. With mortgage rates stabilizing and inventory growing, now might be an ideal window for many buyers to secure their dream home .