Waiting for lower mortgage rates can sound like a smart strategy. After all, a lower rate can reduce your monthly payment and borrowing costs.
But there is one problem: the rate you might get later is only one part of the equation.
While you wait, home prices, inventory, competition, your savings, and your own financial situation can change too.
A recent AD Mortgage study looked at 23 years of housing data to see what historically happened when buyers purchased immediately versus waiting two years. The result? Buying immediately produced the lower purchase and financing cost in 61% of the scenarios studied nationwide.
That does not mean everyone should buy now. It does show why trying to time a home purchase around mortgage rates alone can be risky.
What the Study Compared
Researchers examined housing conditions across all 50 states and Washington, D.C., from 2000 through 2022.
For each year and state, they compared:
- Buying a home that year
- Waiting two years before buying
- A 15% down payment
- Average 30-year mortgage rates
- Home prices
- Two additional years of savings equal to 10% of median household income per year
Across all of those scenarios, buying sooner came out ahead 61% of the time.
But the results varied significantly depending on where and when someone purchased.
California and Florida had the highest buy-now rate at 74%. West Virginia was at the opposite end at 39%, meaning waiting performed better in more of the historical scenarios analyzed there.
That difference is an important reminder that national headlines do not always reflect what is happening in your local market.
Why Lower Mortgage Rates Don’t Automatically Mean a Better Deal
It is easy to focus on rates because they have a direct impact on your payment.
But suppose mortgage rates fall while home prices rise. You could end up borrowing at a better rate but paying substantially more for the house.
The study found a good example between 2013 and 2015. The average 30-year mortgage rate fell from 3.98% to 3.85%, yet buying in 2013 still produced the better outcome in 84% of the state-level scenarios analyzed.
In other periods, waiting worked better.
From 2007 through 2010, during the housing downturn, waiting outperformed buying immediately in every year analyzed. Then from 2020 through 2022, buying immediately won in every state-level scenario studied.
The takeaway is not that buying now always works.
It is that mortgage rates cannot tell you by themselves when to buy.
What Could Change While You Wait?
If you are considering delaying a purchase because you expect rates to fall, look at the entire picture.
While you wait:
- Mortgage rates could fall, rise, or stay relatively flat
- Home prices could change
- More buyers could enter the market if rates fall
- Inventory could improve or tighten
- Your income, savings, debt, or other financial priorities could change
- The homes available today may be very different from those available later
That is why we would rather run the numbers based on today’s options than tell a buyer to purchase simply because someone thinks rates are heading one direction or another.
Know What This Study Doesn’t Measure
There is another important caveat.
The AD Mortgage analysis was designed to compare purchase and financing costs. It did not include every expense or financial benefit associated with homeownership, including items such as property taxes, homeowners insurance, maintenance, or home equity.
So this is useful historical data, not a formula for deciding whether you should buy.
Your numbers matter more.
So, Should You Buy Now or Wait?
Start with a different question:
Does buying a home make sense for you at today’s price, payment, and terms?
Look at:
- What monthly payment fits comfortably into your budget
- How much cash you want to keep after closing
- How long you expect to own the home
- What homes are actually available in your target area
- Whether today’s purchase makes sense even if rates do not fall soon
If those numbers do not work, waiting may make sense.
If they do work, passing on the right home solely because you are hoping for a lower future mortgage rate is still a bet on what happens next.
And nobody knows exactly what rates, prices, or inventory will look like two years from now.
Make the Decision Based on Your Numbers
Buying a home should not be about chasing the supposedly perfect market.
If you’re considering a move in Northern Virginia or the Eastern Panhandle of West Virginia, we can help you look at the actual homes, pricing, market conditions, and tradeoffs in front of you.
Sometimes the numbers say move forward. Sometimes they say wait.
Our job is to help you figure out which one makes sense for you.