Alexandra Twin
Buying a house at what might be the top of the market could be a big risk, but with mortgage rates still fluctuating and another rate cut from the Federal Reserve, you might be wondering if now is a good time to jump back in, or are you better off waiting a bit longer?
The national average for a 30-year mortgage is 7.01%, according to Bankrate. This rate remains high as the Fed anticipates not as many rate cuts this year.
On top of this, there's a new President taking office on January 20. One of Donald Trump's key policies is imposing a 25% tariff on goods from Mexico and Canada and a 10% tariff on Chinese goods. Economic experts warn this could drive costs higher for many households.
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Lawrence Yun, a chief economist for the National Association for realtors told CBS he wouldn't be surprised if mortgage rates hover between 6% and 7% in 2025. However, he cautioned that rate increases could go into effect if some of Trump's policies create more inflation.
How the job report impacts rates
The Bureau of Labor Statistics (BLS) reported that total nonfarm payroll employment increased by 22,000 in August. While it marks a slight rise, the figure continues the hiring slowdown that’s been evident since April. The unemployment rate held at 4.3%, showing little change from both the prior month and a year earlier.
Job growth was uneven. Employment in major sectors such as construction, retail trade, and professional and business services showed little to no movement. At the same time, federal government jobs declined by 15,000, while mining, quarrying, and oil and gas extraction lost 6,000 positions.
This softer job market backdrop is one reason the Federal Reserve cut interest rates three times in 2024. Slower hiring and modest job losses in certain industries signal cooling economic momentum — a dynamic that typically prompts lenders to offer lower mortgage rates for both purchase and refinance loans.
Still, affordability challenges remain. Home prices are widely seen as overvalued, and even with rates dipping, demand has been sluggish. That mix raises the question: should buyers jump in now to lock in financing, or wait in hopes of better opportunities if the market cools further?
Should you buy a house now or wait?
Housing prices remain elevated, though they’ve softened somewhat. The median sales price of houses sold in the U.S. was $410,800 in July, according to Federal Reserve Economic Data. That’s down from last year’s peak, but affordability is still stretched for many buyers.
Consumer sentiment is mixed. Fannie Mae’s latest Home Purchase Sentiment Index shows that 72% of consumers still say it’s a bad time to buy — but that share is shrinking. The share of consumers who say it’s a good time to buy rose nine percentage points last month, with 28% now believing conditions are favorable, up from 23%. On the flip side, the net share of those who think it’s a good time to sell slipped four percentage points, with 58% calling it a good time to sell versus 41% who disagree.
For would-be buyers, the math is tricky. Mortgage rates are still high enough to limit affordability, yet first-time buyers consistently make up about one-third of all sales, according to NAR — a sign that demand hasn’t disappeared. Buying offers stability and the chance to build equity, but renting remains the cheaper option in most markets.
Renters, however, aren’t getting much relief either. Nearly half 48% of new apartments built this year were rented within three months, up from 47% the prior quarter, according to Redfin. With landlords regaining leverage, asking rents rose 2.6% year over year to $1,790 in August — the fastest increase since late 2022.
In other words, there’s no universal answer on whether to buy now, wait or rent. The decision ultimately comes down to your personal finances and timeline. If you can comfortably qualify and plan to stay put long term, today’s market may still make sense. Otherwise, renting a bit longer could buy you time — but be prepared for rising costs there, too.
Buy now if you need to move
Not everyone has the luxury of waiting until the housing market cools to buy a house. Maybe your job has transferred you across the country, or you're pregnant, and the one-bedroom apartment no longer works.
Even though renting is always an option, if you need to move and feel financially ready for homeownership, meaning you can qualify and meet the monthly mortgage payments and other expenses, it may be better to buy now versus wait. You can begin building equity while taking advantage of tax deductions from the interest you pay on a mortgage, home-related renovation costs and property taxes.
Buy now if you plan to stay put
If you intend to stay in your home for a long time, buying now rather than waiting might be smart. That’s because, at the current rate of home appreciation, the house you pass on now will likely cost you more in the future.
Besides, right now you’re building substantial equity in your current home, and even if house prices fall, you won't be impacted because staying put for the long term gives the market time to rebound when it is time to sell.
Beyond the purchase price, you’ll likely also pay thousands of dollars in closing costs when you buy a home. To justify those costs, it’s best to be reasonably confident you won’t be moving anytime soon. What’s more, selling a home very soon after buying can have serious tax implications.
Buy now if you’re financially stable
The best mortgage deals are available to people with the best credit scores. According to the Federal Reserve Bank of New York, the median credit score for mortgage borrowers was 770.
To qualify for a mortgage, you must demonstrate that you are at low risk of forfeiting on your monthly payments. It is also important to have enough in the bank for a down payment and closing costs — which usually range from 2% to 5% of the value of your mortgage and are paid in addition to your down payment.
Wait if you can’t afford to buy
As obvious as that sounds, if you can’t afford the monthly payments, let alone the closing costs, a down payment and other homeownership costs, then it might not pay to buy — at least right now, especially since renting is now less expensive than buying.
Wait until your credit improves
If you need help qualifying for a mortgage at a good rate because of a low credit score, scant employment, a high debt-to-income ratio, or too much outstanding debt, it may be better to wait.
However, keep in mind that many experts predicted home prices would fall in 2023, along with lower interest rates, but neither happened. So now might be a good time to work on your finances so that when prices and rates do drop (and we hope they will), you’ll be ready.
Wait if you can’t find a home
The NAR reported that November sales of existing homes increased 4.8%. This was the best market numbers since March 2024.
"We're seeing a slow shift from a seller's market to a buyer's market," said NAR Chief Economist Lawrence Yun, as reported on the NAR website. "Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising nationally."
As existing home sales stall out, you may struggle to find a home that meets your needs at a price you can afford. Instead of compromising your wish list, consider waiting until inventories increase.
Key takeaways
- The 2025 housing market makes it challenging for prospective buyers to buy at this time unless you are paying in cash and credit isn’t an issue.
- If your credit score is strong and you have enough cash to cover your monthly mortgage payments, down payment and closing costs, buying now might still be smart.
- If you plan to stay in your home for a long time, even at higher prices, now might be a good time to buy to gain equity.
- If your finances are not ideal, or if home values in your area are declining, it might be better to wait.
Bottom line
There's no right or wrong answer to whether now is a good time to buy a home. That decision is personal and depends on a number of factors. Plus, there’s no way to know what the future will bring for the housing market and mortgage rates.
That’s why it's important to weigh your options and make a decision that makes sense for both your finances and your family.
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