Is Now an Ideal Time to Buy a Home?

Mortgage rates this week dropped 26 basis points, marking the largest weekly dip in rates in over a year, giving homebuyers an opportunity to lock in a lower rate.

A new report from Redfin has found that with rates seemingly on the decline after a series of macro-economic events, including the Fed deciding against another interest-rate hike, the Treasury announcing plans to issue less long-term debt than expected, and the job market growing slower than expected, makes now the time for serious homebuyers consider locking in a mortgage now, as the average rate sits at its lowest level since mid-September.

And in a volatile market, while rates could continue their downward trend, it’s also possible they will increase as well. The downward trend could reverse if this month’s economic news goes the other way; for instance, rates could increase if the November 14 Consumer Price Index (CPI) Report shows higher-than-expected inflation.

Though rates are more than double pandemic-era levels and some homebuyers are still priced out of the market, rates going from near the 8% mark to 7.50% shaves a few hundred dollars off a monthly mortgage payment in many areas. A homebuyer in Seattle, for instance, would pay $4,984 per month for a median-priced home ($775,000) with a 7.4% mortgage rate, compared to $5,240 monthly with rates at the 8% mark.

“I’m advising buyers to lock in a mortgage rate as soon as they drop to a number where they can make the math work,” said Seattle Redfin Premier Agent Hal Bennett. “Payments could go up hundreds of dollars overnight if the winds shift on mortgage rates, and all of a sudden you won’t be able to afford the home you want or you won’t qualify for a mortgage. This window of opportunity could be narrow.”

In a sign that potential buyers are heeding these positive buying forces, the Mortgage Bankers Association (MBA) reported that overall application volume rose 2.5% week-over-week, according to Joel Kan, MBA’s VP and Deputy Chief Economist “driven by the U.S. Treasury’s issuance update, the Fed striking a dovish tone in the November FOMC statement, and data indicating a slower job market.”

Redfin reports that there have been other glimmers of hope emerging for buyers as well.

While overall nationwide housing inventory remains low, there has been an unseasonal uptick in the total number of homes for sale, which is at its highest level since the start of the year. New listings rose 1.5% from a year ago during the four weeks ending November 5, just the second increase since July 2022.

Realtor.com reported that there was an unexpected and unseasonable increase in available housing inventory during the month of October (5.1%) even as rates exceeded 20-year highs.

Additionally, nearly 7% of home sellers dropped their asking price–the highest portion on record.

According to the National Association of Realtors (NAR), more than 80% of the metro markets (182 out of 221) polled in Q3 posted home price gains, as 11%of the 221 tracked metro areas registered double-digit price increases over the same period, up from 5% in Q2. Year-over-year, NAR reports the national median single-family existing-home price climbed 2.2% to $406,900. In the previous quarter, the year-over-year national median price declined 2.4%.