Should I Buy a House Now or Wait? 10 Questions to Ask Yourself

Inventory: Are there enough homes for sale right now?

Higher inventory levels lead to a better scenario for buyers. More homes for sale means you not only have more options to choose from, but you also tend to get better prices.

According to the latest data from the National Association of Realtors (NAR), the total housing inventory at the end of October 2024 was 1.37 million units, an increase of 0.7% from September and 19.1% from the same period last year (1.15 million).

Based on the current sales pace, the unsold inventory is at a 4.2-month supply, a slight dip from 4.3 months in September but an increase from 3.6 months in October 2023. This indicates a balanced market, leaning in favor of either buyers or sellers depending on local conditions.

Pricing: Are homes priced to sell right now?

The median home price decreased by almost $5,000 between August and September 2024, from $429,990 to $425,000. Price reductions increased slightly to 18.6% in September, up from 17.7% in the same period last year.

Almost all U.S. regions registered an increase in the share of price reductions: the Northeast (1.4 percentage points), the West (1.3 percentage points), and the Midwest (1.1 percentage points). Only the South had a decline, but only a slight decrease of 0.1 percentage points. Experts attribute the price cuts to the availability of more housing options.

When sellers drop their home prices, they’re usually more willing to offer concessions, like covering closing costs or giving credits for repairs. This gives buyers a great chance to negotiate better terms, helping them save money and get a better deal on both the price and extra costs of buying the home.

Financing: How do mortgage rates play a role right now?

Even given the Federal Reserve’s interest rate cuts, mortgage rates have still been stubbornly high.

As of November 21, 2024, the average 30-year mortgage rate was 6.84%, marking a 0.06% increase from the previous week and posting a higher rate than the 52-week average of 6.74%.

Although the Federal Reserve cut interest rates for the second time this year, experts predict that mortgage rates will not significantly drop in the near future. Even with the Fed’s 50-basis-point cut in September, interest rates continued to be in the upper 6% range. The bottom line is that buyers are facing elevated interest rates and may not see a sharp decline anytime soon.

“The new normal will be around 6%,” Lawrence Yun, chief economist at the National Association of Realtors, recently told national news outlets. “We are not going to return to 3%, 4%, or 5% mortgage-rate conditions.”

Everything costs more money right now, and rates are higher. So buyers have to figure out what they can realistically afford without going into more debt on a monthly basis.

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  Chris Carozza Real Estate Agent at RE/MAX Right Choice

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Economy: Will inflation affect a purchase right now?

The latest economic data indicates 2.6% inflation for the 12 months ending October. That means if your monthly expenses were $5,000 a year ago, you’re now looking at $5,130. As inflation rises and interest rates climb, many people feel the strain on their budgets. If you’re thinking of buying a home, it’s important to realistically assess what you can afford.

Carozza says, “Everything costs more money right now, and rates are higher. So buyers have to figure out what they can realistically afford without going into more debt on a monthly basis.”

While rising inflation may lower consumer confidence and purchasing participation in general, homebuyers could actually see it as motivation to buy now. Here’s why:

• Possible rent increases. As more and more states move toward rent control, landlords are almost forced to make inflation-based increases to rent. (Because they can no longer keep rent steady for years and then make a big increase to market price when the next tenant moves in.)
• Possible interest increases. Yes, experts believe that interest rates will hold steady. But historically, the Fed has used an increase in interest to combat rising inflation. So if inflation gets out of control in 2025, those experts could be proven wrong.
• Possible construction cost increases: Rising inflation makes building materials and labor more expensive. This means if you don’t act now, you could be paying a lot more for a new or newly renovated home in the future.

Bottom line, the real estate market, in general, may be in the middle of some changes, but it’s more of a shift back to normal than it is a “crash.” Carozza says that buyers don’t need to anticipate anything like the Great Recession of 2008. “Realtors can’t see into the future. I do see a correction [coming], but I’d be absolutely shocked if the market falls off a cliff.”

The individual factors: Is now a good time to buy personally?

Market research aside, buyers need to evaluate whether or not this is a good time to buy a house on a personal level.

Buying now is the best idea for some people

It may be a good time to buy a home if you can answer “yes” to these five questions:

1. Do you have a high credit score?

In order to obtain a mortgage to purchase a house, lenders will pull your credit report and look at your credit score. While each lender is different in what score ultimately disqualifies an applicant, a general rule of thumb says that you’ll need a credit score of at least 580 for an FHA loan and 620 to 640 for a conventional loan. However, higher scores typically give you access to better rates and terms, an aspect that’s important if you plan to buy now.

2. Do you have a sufficient down payment?

It’s possible to obtain a home loan with as little as 5% to 10% down (lower for certain programs). However, a down payment of 20% or more will significantly decrease your monthly payment because you won’t be charged private mortgage insurance (PMI). Given the current interest rates, buyers who can put down at least 20% of the purchase price put themselves in a better position to buy now.

3. Will you be living in the home for a while?

Closing on a home presents a significant expense — typically about 2% to 5% of the loan. On a $300,000 home with 20% down (thus, a $240,000 loan), that means you’d pay $4,800 in closing fees at a minimum. When you look at that sum over five or ten years of home ownership, it’s not that bad –– but it’s definitely not something you’d want to pay twice in a few years’ time!

4. Are you in a position where buying makes sense?

The nation’s median rent rose by 1% in November 2024 compared to the same month last year. Rent is expected to rise in 2025 and 2026, disrupting the lower prices renters have benefitted from in recent years due to the post-COVID surplus of multifamily housing. The slowdown in construction and strong demand will drive rent price increases.

As such, some current renters may find that buying a home now is worth it because it puts them in a better financial situation. However, “my rent just went up again” shouldn’t be the only reason to buy now.

It’s still important to consider other factors, like interest rates and home prices, to see if you can manage mortgage payments in the long run. Thus, buyers should still take care to run the numbers if they intend to buy now.

5. Are you in a position to negotiate?

Since sellers seem to be reluctant to price (and update) their homes to market standards, buyers will need to be prepared to negotiate if they buy now. Come to the offer table prepared with fair market pricing data in your area. Don’t get talked out of contingencies that work to your advantage. And ask for necessary repairs to be made before closing. (Tip: working with a great agent can help take the stress out of these negotiations!)

Waiting out the market is the best idea for other people

On the other hand, it may be best to wait a while to buy a house if you answer “no” to any of these questions:

1. Is there a high inventory of available homes in your desired buy area?

As mentioned above, inventory levels affect pricing. With fewer houses listed for sale, purchase prices go up because sellers know that buyers have fewer options to choose from. Low inventory can also create bidding wars and a lack of negotiating power on the buyer’s side.

A good buyer’s market is one with plenty of choices available. If your desired market location is lacking in inventory, it might be best to put your house shopping off for a while.

2. Do you have a low debt-to-income ratio?

Debt-to-income (DTI) ratio expresses the amount of your monthly income that currently goes toward paying off debt. Lenders look at this figure to determine the riskiness of offering a mortgage.

To calculate your debt-to-income ratio, total up all your current financial obligations and divide that figure by your total income. Typically, lenders want to see a DTI ratio of 36% or lower, though some may stretch to 45% with additional loan terms. Any higher, and your mortgage application will likely be denied, so work on paying off some debt before pursuing a home purchase.

3. Can you afford the moving expenses and home ownership costs?

If a down payment is going to deplete all your savings, it might be best to wait a while before buying. Don’t forget that buying a house also requires moving into it –– and that’s not cheap! Average moving costs run around $1,250 for local moves and $4,890 for long-distance moves.

Carozza says, “Moving is stressful and expensive. That’s another reason why you don’t want to be moving every other year.”

And after moving in, you’ll also be responsible for all the maintenance costs. As a rule of thumb, be sure to budget between 1% to 3% of the home’s value each year for maintenance. For the first year, it’s best to err on the high side since you’ll probably have some repairs and updates you want to make immediately.

4. Do you anticipate a stable job and family situation for the next few years?

As already established, it makes better financial sense to be in a home for at least a few years. So as you’re evaluating readiness to purchase, be sure to account for any potential job transfers on the horizon. Up to 29% of relocations can be attributed to occupational reasons.

Also, consider whether or not you plan to add children to your household. This will largely affect home purchase decisions, from location and neighborhood type to home size. If there’s an imminent job or family change, maybe hold off on buying a house.

5. Do you have a clear picture of what you want?

Similarly, make sure that you (and your partner, if you have one) know exactly what you want in a house before jumping into a purchase. Make a list of non-negotiables as well as a list of desires.

Carozza says, “Buyers should not have to talk themselves into liking the house. It’s a big commitment, so if they’re not one hundred percent on board with the house and comfortable with where they’ll be coming home every day, then I wouldn’t buy the house.”

Conclusion: Weigh your readiness to buy a home now

Ultimately, the decision to buy a house now or wait is a personal one. Nothing is ever set in stone when it comes to the general economy and real estate markets. The best you can do is make sure that you have your own financial world in order, then do what’s right for your particular situation.

HomeLight’s Home Affordability Calculator and Down Payment Calculator can help you better understand the costs associated with buying a home. Along with the 10 buyer-assessment questions above, these free tools can help you get a better picture of what safe budgeting looks like.

A good local real estate agent can also help you assess your readiness to buy now. After all, they know the current realities of your market at a micro level. HomeLight can connect you with a top-performing agent in your area. We analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.

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