Is now a good time to buy a house? Key factors to weigh

Buying a home is one of the biggest financial and personal decisions most people ever make. That’s why the question of whether now is a good time to buy a house comes up so often — and why it’s rarely simple to answer. The market moves quickly, mortgage rates fluctuate, and prices respond to supply and demand.

Today’s housing landscape is still marked by limited inventory and relatively high mortgage rates, which keep affordability out of reach for many buyers. At the same time, some regions are starting to see price stabilization, and experts expect gradual changes as the economy cools. 

This article looks at the current housing market and the pros and cons of buying a house right now. 

Understanding the current housing market

The housing market is always in motion, influenced by inventory levels, and economic shifts. Whether you’re casually browsing or ready to buy, keeping the following fundamentals in mind can make the process easier. 

Buyer vs. seller market

In simple terms, a seller’s market is when demand is higher than supply, so homes sell quickly and at higher prices. In contrast, a buyer’s market occurs when supply outpaces demand, giving buyers more leverage as homes take longer to sell.

Today, just over 28 percent of U.S. homes are selling above asking price, down from 32 percent a year ago and well below the 53 percent peak in 2022. These numbers indicate that buyers may be gaining an advantage in many markets. The reason for this swing? More homeowners are listing their properties, especially those who bought or refinanced before mortgage rates rose and now want to cash out the equity they’ve built. 

Marc Halpern, CEO of Foundation Mortgage, said, “The Redfin data is a clear indicator that the housing market is undergoing a meaningful shift in balance. We are seeing a softening of demand relative to supply, which is not surprising given the combination of elevated mortgage rates, persistent affordability challenges, and general economic uncertainty.” 

It’s important to note that housing conditions vary by location. Some areas still see bidding wars, while others have homes sitting on the market longer than before. Even periods of balance are temporary — changes in interest rates, job growth, and broader economic trends can quickly push the market in a different direction.

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Mortgage rates

Mortgage rates are a major factor in how affordable a home truly is. Higher borrowing costs lead to larger monthly payments and significantly more interest accrual across the full loan term. On the flip side, lower costs bring both numbers down. Right now, the average 30-year fixed mortgage rate is 6.33%, more than twice the record low of 2.65% reached in January 2021. That gap has a major effect on affordability. 

Still, for some buyers, today’s rates may put homeownership further out of reach. For others, borrowing costs are still manageable depending on income and savings. Here’s a simple table to show how different rates affect monthly payments and lifetime costs on a 30-year, $400,000 loan:

Plug your own numbers into Better’s mortgage calculator to see how different rates affect monthly payments and long-term costs. Once you find a rate you can afford, our quick pre-approval process helps you shop for homes with confidence.

Current state of the economy

The broader economy directly influences how confident people feel about buying a home. Inflation raises everyday expenses and often leads to higher borrowing costs, and tariffs on materials like lumber or steel can push construction prices up. Together, these factors limit supply and keep home prices elevated.

At the moment, the U.S. economy is sending mixed signals. Some areas are improving, while others show strain:

— Inflation: About 2.9 percent, down from recent highs but still above the Fed’s 2% target.

— Jobs: Only 22,000 added in August; unemployment has risen to 4.3 percent.

— Growth: Gross Domestic Product forecasts for 2025 have been cut to below 2 percent.

For buyers, this uncertainty shapes decisions in different ways. Some choose to act now to lock in a consistent housing payment rather than face rising rents, while others wait until they feel more financially secure. Both approaches can make sense depending on personal circumstances, financial readiness, and risk tolerance.

Housing supply, demand, and pricing trends

Inventory

Inventory is the number of homes available for sale, and it plays a central role in determining if buyers or sellers have more negotiating power. The U.S. existing home inventory stands at 1.55 million, up 0.65 percent from last month and nearly 16 percent higher than a year ago. 

A large pool of listings gives buyers more options to compare, which can slow price growth and create room for concessions. For sellers, however, more supply means tougher competition, requiring sharper pricing and standout presentation like professional staging or high-quality listing photos. 

Home prices

Home prices remain uneven across the country. In some regions, limited supply and steady demand are still pushing values higher. In others, especially where listings linger, sellers are beginning to reduce asking prices. As of July 2025, the average home price was $512,800, underscoring how elevated costs remain even with more frequent price reductions.

The lowest home prices are mostly in the South, Southwest, and Midwest, where more land, lower taxes, and smaller populations keep costs down compared to the Northeast and West Coast. By contrast, Hawaii tops the nation with an average home price of $840,256 due to elevated living costs and limited land. California is close behind at $784,840, where housing, taxes, and daily expenses keep the cost of living among the highest.

Home sales

Sales activity reflects how quickly homes are moving. Properties in some areas are still selling fast, particularly those with strong school districts, walkable amenities, or close access to major job centers. 

But overall, sales volume has slowed as higher borrowing costs limit how many people can afford to act. For buyers, slower sales mean more time to evaluate options and less pressure to bid quickly. For sellers, it often means adjusting pricing strategies or offering concessions to close deals.

Competition

Demand is slowing compared to the frenzy of 2021–2022, but competition hasn’t disappeared. 

Limited inventory is still fueling bidding wars and fast sales in cities like Boston and Buffalo, while parts of the Sun Belt are seeing slower activity and even price cuts. 

Nationally, trends point toward a gradual move to balance. But in hot markets, buyers still need to act quickly, secure financing, and make competitive offers to stand out.

Is it a bad time to buy a house? Personal considerations

Conditions in real estate can create pressure, but your own readiness often matters more. When buying a home in the market, it’s important to know the considerations that matter most. 

Income

A steady, reliable income is one of the strongest indicators that you may be ready to buy a home. Mortgage lenders look closely at your earnings and employment history to gauge whether you can handle monthly payments. They also factor in property taxes, homeowners' insurance, and regular upkeep. 

A good rule of thumb is to plan for your monthly payment to stay under 25 percent of your take-home pay on a 15-year fixed-rate mortgage. By calculating what you can safely afford ahead of time, you’ll avoid stretching your budget and reduce the risk of financial stress later on. 

Savings

Most lenders require a down payment, and buyers need to plan for closing costs and moving expenses. While assistance programs, grants, or gift funds can offset some expenses, having your own cushion makes the process smoother and less stressful. Lenders also see strong savings as a sign of financial stability, which can improve your chances of approval. 

A solid benchmark is saving 20–25 percent of the purchase price to cover your down payment, closing costs, and moving expenses. For a $400,000 home, that means about $100,000, plus three to six months of living expenses in an emergency fund. 

Debt and affordability

Lenders look closely at your debt-to-income ratio (DTI), which compares how much you owe each month to how much you earn. A lower ratio tells lenders you have room in your budget for a mortgage, making approval more likely. 

If you’re not sure where you stand, it helps to calculate your DTI and learn what counts as a healthy range before you apply. To find this ratio, total your monthly debts (including your mortgage), divide by your gross monthly income, then multiply by 100 to get a percentage.

How you handle your current debt also matters. Keeping credit card balances low and making payments on time shows lenders that you’re financially responsible. These habits can improve your chances of approval and also help you qualify for better loan terms and lower borrowing costs.

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How to buy a home during economic uncertainty

Buying a home when the economy feels unstable can be intimidating, but it isn’t impossible. Here are a few strategies that can help you move forward with more confidence:

— Negotiate wisely: Look for moments when you have leverage, such as in a buyer’s market or when a home has been on the market for a while. Following a step-by-step outline keeps the process organized and less stressful.

— Shop around for rates: Compare offers from multiple lenders instead of settling on the first one. Interest rates, fees, and terms can vary widely, so getting pre-approved gives you a clearer picture of what you can truly afford.

— Set a realistic budget: Avoid stretching to the maximum loan amount a bank offers. Stick to what feels comfortable, factoring in property taxes, insurance, and maintenance. Even with lender approval, purchasing beyond your means can strain your finances and cut into your savings.

Simplify the path to smart homebuying decisions with Better

For anyone still wondering when to buy a home, the answer depends as much on your own readiness as on market conditions. Interest rates and prices can change quickly, but your income, savings, and lifestyle ultimately matter most. 

By assessing the current market and clarifying your goals, you can make a decision that’s both practical and right for your circumstances.

If you’re looking for a qualified, knowledgeable real estate agent to guide your search, Better connects you with a top local agent. Plus, financing with Better, can save you $2,000 on closing costs.

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