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Mortgage rates are lower today than they were a year ago. Last October, the average 30-year loan rate was over 7%. As of this writing, the average 30-year mortgage is 6.44%.

But just a couple of weeks ago, mortgage rates were sitting closer to 6%. So all told, it’s a better time to sign a mortgage now than it was in late 2023.

That said, you may want to hold off on taking out a mortgage. Here’s why.

1. Home prices are still elevated

Although you can save on a mortgage now compared to last year, home prices are more expensive than they were a year ago. In September, the median existing-home sales price was $404,500, according to the National Association of Realtors (NAR). That’s up 3% from a year ago, when the median home sold for $392,700. It’s also the 15th consecutive month of year-over-year increases.

Even if you spend a bit less right now from a mortgage rate perspective, you may want to wait for home prices to drop further. That may happen during the winter months, when there tends to be a natural decline in buyer demand. Sitting tight until early 2025 could help you pay less.

2. Rates could fall even more

The Federal Reserve has already lowered its benchmark interest rate once this year. And it’s expected to move forward with additional rate cuts before 2024 ends.

That could lead to a further drop in mortgage rates. If you wait a bit longer to sign a mortgage, you might end up with a rate you’re even happier about.

That said, no matter when you decide to sign a mortgage, you need to shop around and compare offers. You can start by checking out this list of the best mortgage lenders and rates.

3. There’s not a ton of inventory to choose from

The NAR reported a 4.3-month supply of homes for September, up 23% from a year ago. But it’s still below the 6-month supply of homes that’s often needed to meet buyer demand in full.

When real estate inventory is down, sellers have the upper hand. They can command higher prices because as a buyer, you don’t have many choices.

But as mortgage rates continue to fall, which is expected to happen as we go into the new year, more sellers may be motivated to list their homes. That could lead to an increase in inventory, more choices, and better prices. So it pays to hold off on applying for a mortgage a bit longer if you can.

If you’ve been trying to buy a home for quite some time, you may be frustrated by your lack of progress. And you may be inclined to put a mortgage in place now that rates are a bit lower. But if you hold off for a few more months, you may find that you’re able to get a much better deal on a home and a loan to finance it.

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