Is Now A Good Time To Buy A House? What To Know In 2024

If you’re hoping to move in the coming year, you may be wondering, “Is now a good time to buy a house?” This question is more nuanced than you may think. Let’s review some of the primary factors you should consider before buying a home.

In reality, there may never be a perfect time to buy a house – it can be challenging any time, even when it’s a buyer’s market. Whether you should buy a home largely depends on your personal situation.

For instance, your budget, the amount you’ve saved for a down payment and your credit score all play a factor in whether you’re ready to buy a house.

How To Determine If You Should Buy A House

To decide if it’s a good time to buy a house, take a look at your financial situation and the current home prices in your area. If you have money saved for a down payment and your estimated mortgage payment is the same or less than what you currently pay for housing, buying now may be a good choice.

Keep in mind, you’ll need to make your offer competitive with other offers sellers might receive. An effective way to do that is to get a Verified Approval Letter¹ from your mortgage lender before you look at homes. With the letter in hand, you can increase your chances of the seller taking your offer seriously.

The current real estate market conditions are changing, making it all the more important to do your research in order to be more competitive as a buyer. Here are some of the main factors you need to know about.

Interest Rates Continue To Fluctuate

Interest rates reached historic lows in 2021, making buying a home more attractive. However, rates continued to rise throughout 2022 and 2023, peaking in October 2023. Rates started to trend slightly downward since, but they remain elevated. Average mortgage rates are currently higher than they’ve been since 2008.

As a borrower, hearing about higher interest rates is never welcome news. Higher rates can mean a higher monthly mortgage payment. Fortunately, signs point to relief this year. Financial experts predict the Federal Reserve will make a few interest rate cuts in 2024. Mortgage rates tend to follow the federal funds rate, so mortgage rates may drop if these cuts pan out.

Home Prices Are Still Increasing

Home values rose dramatically throughout 2021 and 2022. While this accelerated price growth began to slow down in 2023, prices continued to go up. Fannie Mae indicates house prices will continue increasing through the start of 2024. However, they predict this growth to slow. They even suggest prices may decrease later this year and into next year.

It’s Still A Seller’s Market

There are still fewer homes on the market than buyers looking for properties, making it a seller’s market. Fannie Mae suggests that low inventory conditions will remain through 2024.

Homes Are Selling Quickly

Homes have sold very quickly for the past few years, which impacts potential buyers. Buyers may need to make concessions or offer a higher price to help their offer stand out to sellers. Be sure to look at your budget before you start looking for homes so you’ll know what you can afford to offer.

Despite the current market’s unpredictability, 2024 could end up being a great year to buy a home. However, it might be a good idea to act quickly. If you get your initial mortgage approval soon, you can lock in interest rates before they go any higher. You can also get into a home before properties become more expensive.

If nothing else, do your research and look into it. After crunching the numbers, you may find your new mortgage payment would cost less than you currently pay.

Preparing To Buy A Home In 2024

If buying a home is a good fit for your financial situation, you’ll want to be prepared to make an offer as soon as you find a home you love.

Take the time to start your mortgage application as soon as you decide you’re ready to buy. Once you have your initial approval in place, you can make qualified offers on homes that fit your needs. This can reduce the risk of someone else getting the home before you.

Of course, buying a house in 2024 might not be the right choice for everyone. Here are a few factors that could convince prospective buyers to hold off.

Seller’s Markets Make Buying Harder

Home buyers have been operating in a strong seller’s market for the past few years. This means the demand for homes outpaces the available inventory. As a result, buyers have to compete with one another for the houses on the market.

This leads to high prices and stiff competition for home buyers. With the general shortage of housing options, some buyers must go above and beyond to secure a home. A couple of these strategies include making a larger down payment or an all-cash offer. Neither option is ideal for buyers, but it could be what it takes to land a home in a hot market.

If you wait to buy a home, you may be able to enter the market when there are fewer buyers or more homes available.

Interest Rates Are High

High interest rates may pose an extra challenge if you’re looking to buy and sell a home at the same time. Your mortgage may have a lower interest rate than what’s currently available.

By buying a new home, you risk increasing your monthly expenses significantly. Waiting until it makes more sense for you financially to buy a house may be a better option.

Only you can determine if now is a good time to buy a house. Before you decide, carefully consider all relevant factors:

• Your financial situation: Mortgage lenders may consider your credit score and debt-to-income ratio to guide their approval decision. Reflecting on your finances will also help you determine how much house you can afford.
• Market conditions: The real estate market is ever changing. Certain times have less competition than others. Be sure to take a look at its current state to ensure you’re making an informed choice.
• Your overall needs: Whether you’re a first-time home buyer or you need to sell your current house to upsize or downsize, be sure to have an idea of what features your next space must have. Also keep in mind any time constraints. For instance, you may need to move for a job, or perhaps you’d like to start your homeowner journey once your lease ends.

Buying a home is a big commitment so being confident when going into the home buying process is crucial.

Still wondering if it’s a good time to buy a house? The answers to these frequently asked questions may help you get closer to deciding for yourself.

How do I know if I’m ready to buy a house?

You may be ready to buy a house if your finances are in good shape. This can mean having money saved for a down payment, a good credit score and stable income. You’ll also want to evaluate if you’re ready to settle down in one place and take on ongoing costs like homeowner’s insurance and property taxes.

Should I wait for interest rates to come down before buying a house?

If you’re waiting for substantially lower interest rates, you may be waiting a while. Although Freddie Mac predicts 30-year mortgage rates will begin to moderate in 2024, they expect them to stay around 6%. The current average mortgage rate is about 6.77%. This is close to the historical average of 7.74%, despite being much higher than it has been in the last decade.

Is it smart to buy a house right now?

If your new mortgage would be less than what you pay now and you have money for a down payment and closing costs, buying a house could be a smart move. If you don't have money saved to cover these expenses, or if it would increase your monthly housing payment, holding off may be smarter.

There’s no one right time to buy a home, and the best time to buy a house will vary for every prospective buyer. Consider your financial situation and understand how homeownership will impact your bottom line each month.

If you’re ready to start your home buying journey, be sure to start an application with Rocket Mortgage^® today.

1 Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, assets and debt. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, including but not limited to satisfactory insurance, appraisal and title report/search, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close due to a Rocket Mortgage error, you will receive the $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.