Mortgage Rates Are Higher Than Expected, But Now Is A Good Time To Buy

There’s bad and good news for homebuyers: The bad news is that mortgage rates are higher than what experts predicted they’d fall to at the start of the year. The good news is that it’s created a favorable market for buyers. 

Following a record-low month for demand, nearly 80% of all major U.S. metropolitan areas are now buyer’s markets, according to an analysis by Redfin published on August 13.

In general, a buyer’s market is one in which supply far outpaces demand. It occurs when the number of people listing their homes outpaces the number of people shopping. Redfin considers a place a buyer’s market when the number of sellers exceeds the number of buyers by 10% or more. Last month, sellers outnumbered buyers by 51% across the country.

When the balance of power is with shoppers, homes for sale tend to stay on the market longer, giving prospective buyers more negotiating power. Sellers, eager to offload their properties, are more likely to negotiate on price or offer incentives to persuade buyers to choose their home over another.

“Conditions favor buyers more than they have in years, even with rates higher than many expected,” Hannah Jones, senior economist of Realtor.com, told CNBC Select. “Higher rates are keeping other would-be buyers on the sidelines, which means less competition, more inventory and sellers more willing to negotiate.” 

Below, we discuss why home shoppers could be better off buying now, who may want to wait and how to get the best deal with higher rates.

At the end of 2025, housing experts predicted rates would drop to between 6.0% and 6.3% in 2026. In February, rates fell below 6.0% for the first time since 2022, and buyer demand started to rebound. But it didn’t last long: on Feb. 28, the Iran war began, sparking an energy crisis and raising inflation, which pushed up yields on the 10-year Treasury note, and subsequently, mortgage rates.

Still, if you are financially prepared with strong credit and a substantial down payment, you could get a deal by buying while rates are higher than expected and demand is at a lull. 

“Waiting for the perfect combination of a buyer’s market and low rates is a bit of a trap as the two rarely coexist,” Jones said. “Buyer’s markets tend to show up because rates or economic uncertainty have pushed enough buyers out that the ones who remain get leverage.”

However, if it’s too expensive to buy a home because of rates, you may have to wait until those numbers decrease — which experts say could take until 2027 — even if that means that you won’t get to buy in a market that leans toward buyers. 

“Favorable conditions don’t erase the affordability math,” Jones said. 

For example, Better Mortgage boasts low rates. It can also help you close quickly if you’re looking to get the deal done as fast as possible: It has an average close time of 19 days, half what it typically takes. 

FourLeaf Credit Union — and many other credit union mortgage lenders — offer lower rates than their for-profit competitors. Where FourLeaf stands out is its easy pathway to membership; all you need to do is put $5 in its savings account, then you’ll be able to apply for a mortgage.

Finally, if these low-rate lenders don’t fit what you need, think about applying for an FHA loan. These are available to all Americans who have a 3.5% down payment and a 580 credit score. Rocket Mortgage is one of the biggest FHA loan financiers and it also has one of the best records for customer service, consistently ranking at the top of J.D. Power’s customer satisfaction surveys. 

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every personal finance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of home loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.