Homebuyers share how low mortgage rates must go before purchasing

The housing market has been challenging in 2024, with persistently high mortgage rates deterring many potential homebuyers. However, August brought some relief as rates dropped to yearlong lows—below 6.5% for a 30-year fixed home loan.

With the Federal Reserve indicating a potential interest rate cut in September, which could further reduce mortgage rates, homebuyers are contemplating whether now is the time to start house hunting or if they should wait for even lower rates.

Realtor.com®'s midyear forecast anticipates that mortgage rates will fall to 6.3% by the end of the year. This suggests that those who wait might save significantly on interest payments, although trying to time the market remains risky.

To illustrate different perspectives, four homebuyers shared their plans and how low mortgage rates need to go before they make a move.

Kathi Kendall from Scottsdale or Gilbert, AZ, aged 62 and planning for retirement, wants rates below 6% before buying into a 55-plus community. "I am looking for a lifestyle change now that I’m going into retirement and my kids are out of the house," she said. Kendall's current home is paid off, but she plans to finance her next purchase and will adjust her buying decision based on rate fluctuations.

Camille Bradbury from Taos, NM, aged 39 and working as a director of human resources communications, aims for rates at or below 5%. After experiencing regrets with her first home purchase at peak prices in 2021, she is willing to wait up to a year or longer for better terms while boosting her savings through side hustles.

Yancy Forsythe from Kansas City, MO, aged 42 and an experienced real estate investor, seeks rates below 6.25%. He is monitoring listings but remains cautious about entering the market too soon due to concerns about increased competition when rates drop further.

Jonathan and Jennifer Ross from Fort Worth, TX—a couple comprising an attorney and a commercial real estate broker—decided not to wait any longer once rates dipped below 6.5% in August. "I would rather buy now and refinance later to be sure that I can buy at a reasonable price," Jonathan explained.

Real estate experts also weigh in on whether waiting is wise. Sam Fitz-Simon of Compass in Danville, CA notes that many sellers are waiting for lower rates but warns that this strategy could backfire due to rising home prices. Realtor.com senior economist Hannah Jones echoes this sentiment: “If lower mortgage rates spark more buyer demand than inventory can keep up with…prices may climb once again.”

Jason Gelios from Community Choice Realty highlights that it might be easier to purchase now with less competition than face bidding wars later when interest decreases attract more buyers.

For those unwilling to wait indefinitely, options include buying now and refinancing later or preparing thoroughly while waiting by securing pre-approval from lenders and devising strategic game plans with real estate agents like Isiah Denman from Spears Group at Compass in Santa Rosa Beach, FL.