Why you should buy a home this September

For much of the last two years, the answer to the question: "Is now a good time to buy a home?" has been a resounding "no." With inflation hitting its highest point in 40 years and mortgage interest rates more than doubling (rising to their highest level since 2000), it wasn't a good time to enter the mortgage market. And many potential buyers didn't, with home sales dropping to almost a 30-year low in 2023.

But that was then.

Now, mortgage interest rates are cooling again (they're down more than a point from October 2023, for example). And inflation has steadily dropped, so much so that the Federal Reserve is now poised to issue its first interest rate cut of the year when it meets again on September 17 and September 18. Additional cuts to the federal funds rate could follow in November and December. Against this brightening backdrop, then, there's a new, compelling case for homebuyers to re-enter the market. Specifically, they may want to buy a home this September. Below, we'll detail four reasons why they should get started now.

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Why you should buy a home this September

Not sure if now is finally the right time to buy a home? Here are four reasons why it may be:

Mortgage rates are cooling

The interest rate on a 30-year mortgage loan was 7.79% at the end of October 2023, according to FreddieMac. Now it's just 6.53%. And that's absent any formal reduction in the federal funds rate, which has remained frozen for over a year. That's because many lenders have already started pricing in interest rate cuts on the horizon. So you may already be able to get a lower interest rate than you anticipated if you act now.

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Mortgage rates could fall later in the month

While many lenders have already adjusted their mortgage rate offers in anticipation of a Fed rate cut later in the month, they could fall further once a formal cut is issued, particularly if it's for more than the 25 basis point cut most are anticipating. A 50 basis point cut, for example, could cause mortgage rates to fall even further from the average 6.53% they're at now. And while mortgage rates don't correspond exactly with the Federal Reserve's actions, they do follow the same approximate pattern. 

There's less competition now

Lower mortgage interest rates and the potential for them to fall further aren't the only enticing reasons buyers may want to act in September. Simply put: there's less competition now than there will be once a series of rate cuts are issued. This means fewer buyers to contend with and fewer concessions you'll need to offer sellers if you act now. But, if you wait, the dream home that was reasonably priced (and in your budget) may become out of reach with multiple, higher offers to compete against.

Home prices may rise later this year

On the surface, multiple mortgage interest rate cuts are a positive for buyers, but they can also complicate the process. Increased competition among new buyers is inevitable. But home prices, which have been steadily rising, could also grow, too. There's not always a direct correlation between prices and rate decreases, but depending on how many buyers suddenly enter the market, current owners could raise the price of their homes to attract the highest bidder. So it may not be beneficial to wait for a slightly lower interest rate only to see those savings easily erased by higher home prices.

Get started with the homebuying process this September.

The bottom line

Homebuyers hesitant to enter the market may find that this September is a smart time to do so. Not only will they be entering at a time when mortgage rates have already cooled, but they could position themselves to take advantage of even lower rates later in the month. Plus, they'll have to contend with less competition and, possibly, more reasonable home prices versus waiting for later in 2024 or even 2025. But they'll need to act aggressively to take advantage of these timely opportunities. As the mortgage market has shown in recent years, developments can occur quickly and the time to buy could soon become the time to wait, yet again.