Is now the best time to buy a new home?

Is now the best time to buy a new home, or is it better to wait for additional Federal Reserve rate cuts?

Financial advisors are increasingly being faced with that question. And its not an easy one to answer.

Even as markets anticipate eventual rate cuts from the Fed, existing home sales appear headed for another sluggish year as high mortgage rates and limited inventory continue to weigh on affordability. This sticky situation has wealth management clients asking their advisors whether they should make a move new or wait for rates – and home prices – to come down further.

Existing home sales in the United States eased by 0.2% from the previous month to a seasonally-adjusted annualized rate of 4 million in August of 2025, according to the latest data from the Federal Reserve. Sales for the period proved to be lower than the average for the year, while housing inventory fell 1.3% from the previous month to 1.53 million units, equivalent to 4.6 months of supply. At the same time, the median existing-home price rose by 2% annually. September home sales will be released on October 23rd.

Brian Peardon, private wealth advisor at BridgePort Financial Solutions, says his “base case” is a gradual Federal Reserve rate easing over the next year, with the caveat that mortgage rates probably likely will not plummet. In his view, it’s likely that 30 year fixed mortgage rates will shift slightly from their current perch around 6.5% today, down toward perhaps the low-6% to mid-5% range, depending on inflation and global risk, than a dramatic collapse.

“If inflation remains sticky, the Fed may pause cuts, pushing mortgage rates higher again. Rate cuts may provide breathing room, but they won’t bring back housing demand unless they’re substantial, combined with strengthening income growth,” Peardon said.

Elsewhere, John Bish, investment executive at Stifel Independent Advisors, expects the 10-year note to remain above 4% despite cuts in the fed funds rate due to sticky inflationary pressures. As a result, he sees the impact of a fed funds cut on mortgage rates to be muted and a continuation of the slow housing market through the rest of 2025 into the new year. 

“Nationwide home prices did not meaningfully increase in the last 12 months, and many markets are beginning to see a notable percentage of home sellers offer price cuts. Additionally, homes in many markets are spending more time on the market with inventory continuing to climb,” Bish said. 

On the more positive side, Brandon Goldstein, financial planner at Prudential Advisors, anticipates interest rates to be lower than today by this time next year leading mortgage rates lower from current averages.

“If mortgage rates do drop, it is possible that more potential buyers enter the market and that demand for homes will continue to drive housing prices up,” Goldstein said.

HOUSE HUNTING IN A SLOW ECONOMY

While a rate cut could ease borrowing costs for homebuyers, it might also signal broader economic weakness. That means advisors will need to help clients navigate that trade-off as well. Both for their portfolios and their homebuying plans.

Prudential’s Goldstein, for example, is helping clients by reviewing their budgets and financial plans to explore alternative options to buying today, such as continuing to rent. 

“A rate cut might ease the cost of borrowing money; however, it also has the ability to drive up cost of homes. There has been much demand for housing over the last few years. When interest rates fall, more potential buyers will enter the market which will increase competition,” Goldstein said.

BridgePort’s Peardon, meanwhile, believes a rate cut is “not necessarily a red flag,” because it may simply reflect prudent insurance against downside risks.

“Running portfolio stress tests, we look at a client’s portfolios under both “soft landing” and “mild recession” environments to see how assets might respond.  This helps set expectations for clients if the current environment changes,” Peardon said.

 TO BUY OR NOT TO BUY 

For clients who are ready, with good credit, a down payment, and a housing market that meets their needs as well as a long-term horizon, Peardon says he leans toward buying now with hedges like rate locks and refinancing optionality for a mortgage.

“For more buyers just starting the journey to buy a home, I might advise waiting cautiously while staying active in the market by watching inventory and continuing to build towards being buyer-ready,” Peardon said.

Stifel’s Bish believes that stable mortgage rates coupled with a weakening labor market should cause slowing growth in the U.S. housing market to continue into next year. This could open up some housing opportunities depending on the client’s location in his opinion.

“For some buyers, this may mean more affordable homes. For buyers in other markets, homes may not be less expensive, but the price increases will likely decelerate,” Bish said.

Bish adds that borrowers need to carefully manage liquidity on their personal balance sheets to weather unexpected expenses or volatility in cash flow from job loss or reduced income.

Finally, Goldstein says that if clients are in a situation where they would like to purchase a house in 2026, they need to know exactly how much will be needed for a down payment, as well as an emergency fund on top of the down payment.

“While rate changes and housing prices will influence the amount needed for a down payment, it is important to plan ahead so that if an opportunity presents themselves for a home purchase, they are ready to move forward,” Goldstein said.