Boban John
Key takeaways:
- If you have the means, now may be a good time to buy a house.
- Mortgage rates remain well below 7% thanks to a weaker job market, sagging stock market, and economic uncertainty.
- The median U.S. home sale price sits at $426,000, continuing 20 months of year-over-year gains and near a record high.
- Tariffs, inflation, and policy changes add uncertainty, but the market is still active. Home sales are rising in some cities, as buyers adapt to higher rates and rising prices.
Spring is just around the corner, and with it comes prime homebuying season. So, hoping to beat the crowd, many homebuyers are wondering if it’s a good time to enter the housing market. Housing is still largely unaffordable for most of the country, after all, and recent orders from President Trump have put improvements into question. Given these challenges, it’s natural to wonder if now is the right time to take the leap before homebuying season begins.
“Now is the best time to buy in the last two years,” said Daryl Fairweather, Redfin Chief Economist. “Mortgage rates are comparable to what they were two years ago, and prices remain high. However, there is significantly more inventory, which means buyers have the upper hand. In that sense, it’s a buyer’s market, meaning buyers should be able to negotiate lower prices and better offer terms. That’s especially true in markets with the steepest inventory increases, like in Texas and Florida.”
In short, whether or not it’s a good time to buy a house boils down to if it’s a good time for you to buy a house. Let’s dive a bit deeper into market trends to help you answer, “Should I buy a house now or wait?” Plus, we’ll talk a bit about personal considerations.
Market considerations: What’s going on in the housing market?
Here are some key market trends to keep an eye on and help you make an informed homebuying choice.
House prices: Sky-high and still climbing
The median U.S. sale price currently sits at $426,000 – up 3.3% from a year ago. House prices have posted year-over-year gains for 20 consecutive months and are 32% higher than they were in 2020. Although growth recently slowed, we expect prices to continue rising this year, pushing more would-be buyers into renting.
>> Read: Redfin’s 2025 Housing Market Predictions
Mortgage rates: Lower, but volatile
As of March 17th, daily average 30-year fixed mortgage rates sit at 6.8% – slightly up from last week but still near four-month lows. A shrinking economy, uncertainty surrounding tariffs and government layoffs, and an ailing stock market are all helping push rates lower. Economic weakness tends to push bond values higher, which in turn lowers mortgage rates. Redfin predicts that mortgage rates will hover between 6-7% this year.
Importantly, the Fed and economists are also concerned about inflation coming back, which could impact mortgage rates. Plus, following a recent inflation report and large-scale tariffs, they fear that “stagflation” – a combination of slow growth and rising inflation – could set in. Stagflation tends to lead to higher prices and a weaker economy, and is difficult for the Fed to combat.
Mortgage rates are important for buyers because they directly translate to monthly housing costs. The higher the rate, the more you pay every month. For example, let’s assume you make a 20% downpayment on a $380,000 house. Using this week’s 6.8% rate, your monthly payment would be $2,811 (including home insurance and taxes).
But, if we drop the mortgage rate to 6.0%, your monthly payment drops to $2,635. Slight dips in rates can save you tens of thousands over the lifetime of your mortgage.
>> Read: A Housing Market Under Donald Trump: What It Could Mean for Buyers, Sellers, and Renters
Supply: Limited, but rising
Months of supply sits at 3.5 months, where it was for most of 2024. Supply below 4 months tends to favor sellers; supply above 4 months often favors buyers.
Housing supply has slowly made a comeback from 2021, when it bottomed out at nearly one month, which is good news for buyers. However, that’s partly because more homes are sitting on the market unsold, not because homebuilding has rebounded. The U.S. has been chronically underbuilding for over a decade – a major reason why house prices have reached such highs.
In fact, new construction has dropped in the past year because more inventory continues piling up. Home builders have backed off since the pandemic, with new housing starts down 3.1% in January. Trump’s immigration agenda, already underway, will likely lead to fewer houses being built, too.
Supply is also rising because more sellers are listing their homes. The share of homeowners with pandemic-era mortgage rates – often 3% or less – is fading. Areas where homes are most at risk of natural disasters, like in Florida, are seeing record-high inventory levels. Buyers looking to take advantage of this supply bump may be in a better position to negotiate for concessions.
Demand: Cautiously improving
More people are searching for homes and applying for mortgages, hoping to take advantage of the dip in mortgage rates. While this hasn’t translated into more sales yet, well-priced homes in good condition are flying off the market. New home sales have jumped higher, too.
That said, a record share of home sales are getting canceled, and metros with a lot of federal employees – those impacted by government downsizing – are seeing demand shift abruptly. Other metrics remain weak, with new listings flat and a shrinking share of sales going under contract within two weeks. In general, hardly any homes are changing hands.
Even with rising inventory, there still aren’t enough homes on the market to meet demand, pushing prices throughout the country. For buyers who have the budget, this could be a good time to enter the market, as mortgage rates have dipped and some sellers may be more open to negotiation.
Competition: Strong, but it depends on where you’re looking
A slow rise in homebuyer activity means sellers could see more competition for their listings.
House hunters scared off by high mortgage rates have been waiting on the sidelines for years, especially as inventory fell due to sellers wanting to hold on to their pandemic-era rates (the lock-in effect). However, as ~7% rates and near-record prices become the norm, more buyers are deciding to enter the market.
This trend varies by market, though. For example, in Texas and Florida, homes are sitting on the market for longer, while homes in Midwest and East Coast metros are selling faster, causing prices to rise. If you’re searching for a home, choosing the right location can mean more options and greater savings.
>> Read: How to Sell Your House in 2025: A Comprehensive Guide
Inflation: An uncertain future
Inflation has major implications for buyers. As well as influencing the global economy, inflation can impact buyers’ budgets, mortgage rates, and house prices. For example, when inflation rises, mortgage rates tend to follow suit.
Thanks in part to the Fed cracking down hard on pandemic-related inflation, inflation remains at 3% – above their 2% target benchmark. This is a major improvement from the post-pandemic inflation surge, which peaked at 9.1% in July 2022. This is good news for buyers.
However, inflation likely isn’t going to drop further soon, and factors like tariffs and rising unemployment have the Fed concerned about inflation moving higher. Experts believe some of Trump’s policy proposals, namely tariffs, could actually help inflation skyrocket to 6%-9%. Since February 2020, the cost of goods and services has risen 22.5%. Buyers waiting for the market to improve may want to act now, in case inflation rises further.
>> Read: Inflation and House Prices: What Homebuyers, Sellers, and Renters Need to Know
Personal considerations: Are you ready to buy and own a house?
When deciding whether to buy a home in today’s climate, you’ll want to think beyond market conditions and focus on your individual circumstances. Here are some personal considerations to keep in mind.
Financial health
Take stock of your current savings, credit score, and debt levels. Can you afford a house? Or does renting make more sense?
Housing is a long-term commitment, so you’ll want a solid emergency fund for maintenance and unexpected costs.
Monthly budget
Determine how a mortgage payment at today’s rates might impact your lifestyle. Make sure you can comfortably handle monthly payments, property taxes, insurance, and other homeownership expenses.
Job and location stability
Buying a house makes sense if you plan to stay put for several years. A stable job or reliable income is crucial to avoid financial strain, especially if home prices or interest rates rise further.
Choosing your location is also essential. Is your potential home prone to flooding, wildfires, or other climate risks? This is especially important today, as insurers continue dropping homeowners at alarming rates.
Personal goals and timelines
Think about life events, like starting a family, retiring, or relocating. These factors can make owning a home either more appealing or potentially riskier if you need to move soon.
Lifestyle preferences
Homeownership comes with ongoing responsibilities, like maintenance, repairs, and property taxes. Ask yourself if you have the time, resources, and a desire to handle them.
>> Read: Am I Ready to Buy a House? 8 Questions to Help You Decide
Should you lock in your mortgage rate today?
If you have the means, now is a great time to lock in a mortgage rate. Rates are lower than they were a month ago and are unlikely to fall significantly further in 2025.
If you lock in your rate and rates suddenly fall, you have the option to refinance your mortgage too. All-cash buyers hoping to avoid mortgages altogether should act now to avoid probable price increases.
So, is now a good time to buy a house?
If you have the means and are ready to own a home, now is a good time to buy a house. Waiting for rates to fall leaves you at risk of increased competition among buyers and subsequent price hikes from sellers. Rates are lower than they were a year ago and sales are still sluggish but improving, so now may be the time to act. Plus, rates are unlikely to fall substantially more.
It’s worth noting, though, that the market has been topsy-turvy recently due to historically low housing supply. For example, higher mortgage rates typically push house prices down, but they have had the opposite effect over the past three years. Also, declining inventory typically leads to more competition, but prices have been too high for many buyers to afford, causing some homes to sit unsold and others to sell in a few days.
It’s important to be prepared for any surprises that may come.
>> Read: How to Buy a House: 10-Step Home-Buying Guide
Final thoughts
If you’re in the market for a house and have been scared off by high rates, now is the time to connect with an agent and start your home search. Rates will likely remain close to 7% for the foreseeable future, but buyers are getting restless, helping the market gain momentum. The longer you wait, the more competition you’ll see.
