If you are waiting to buy your first home until the fixed rate mortgage drops, you may be in for a bit of a shock. While rates jumped sharply in 2023, waiting for rates to come down until you buy will just allow for home prices to continue to rise, with predicted rates not forecasted to curve this trend. Housing prices have risen nationally and begun to balloon in some urban areas, particularly in some of the cities with fastest-growing home prices, such as Birmingham, Alabama. As this trend continues, waiting for a better rate will just mean you are hooking into a higher price, just with a lower annual percentage rate or APR.
The national average home shows no signs of dipping to pre-pandemic costs, with Zillow having reported in 2025 a 49% increase in equity for homes purchased before 2019. Construction costs have also changed as Trump’s tariffs have affected the housing market in 2025, raising rates and creating a bottleneck in the supply chain. Zillow has also reported a continued increase in the median sale price of homes, sitting at $368,300 as of September 2025, with a 1.5% increase predicted in the coming year.
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Rates can be quite fickle, with multiple factors influencing them, as mortgage rates sometimes go down with Fed rate cuts. Importantly, while the mortgage rate has fallen from its mid-year peaks, Michael Wolf, Deloitte’s senior global economist, published a report in the summer of 2025, predicting mortgage rates to stay above 6% through 2030. Wolf cited both inflation and economic growth as the main drivers of elevated rates, both trends he predicts to continue.
Inflation is a major aspect affecting home prices, and first-time home buyers as well. The Consumer Price Index, an aggregate of the average price of consumer goods nationally, has continued to rise, according to the Bureau of Labor Statistics. This increased cost of living has deeply affected home affordability. In September 2025, Zillow reported that the mortgage rate nationally would need to drop as low as 4.4% to make housing costs within 30% of the average American family’s income. These costs include mortgage, taxes, and insurance on a new home.
The cost of homes has continued to rise due to limited supply. As the population has continued to grow, it has been hard to keep up with demand for housing, even with housing inventory rising across the United States. While a 2025 Bank of America Survey of 1,000 prospective home buyers found that a quarter of them believe prices will come down, it is unlikely this will be the case.
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