Summer is usually peak homebuying season, but recent market changes could signal that activity is more likely to ramp up in the fall. The lackluster results of July’s Federal Reserve meeting were a disappointment to many, but mortgage rate declines throughout August bring new opportunity. As we enter September, rates have plunged to the lowest percentage we’ve seen all year. However, it’s still too early to tell how the rate change will affect other market trends.
Throughout August, inventory and home prices continued to follow the trajectory of the earlier summer months. Buyer hesitation means properties are spending more time on the market, discouraging sellers from listing. Home inventory growth has slowed notably throughout August, leaving buyers with limited choices within their budget. Sellers are reluctant to lower prices to meet buyer needs, locking average prices in place in most states.
While rate drops could encourage more sellers to list their properties, they’re unlikely to prompt price drops. Still, this new change brings a breath of fresh air into the stale market, bringing hopes of new developments in future months.
Mortgage Rates Are Trending Down
In a stunning market turn, rates on a 30-year fixed mortgage have finally dropped below 6.5%, giving homebuyers hope for affordable financing. On September 5th, the average rate on a 30-year fixed mortgage dropped an astonishing 16 basis points to bring the average down to 6.29%. This is the biggest drop since August 2024 and the lowest rate since October 3rd of last year. It has the potential to save buyers thousands over the course of a loan and drop payments by $100 or more compared to this year’s peak rates of 7.08%.
The downturn is likely in anticipation of September’s expected Fed cut. However, it’s too early to tell whether buyers will flood the market or wait to see what happens at the Federal Reserve meeting in mid-September.
Home Inventory Growth Slows
2025 has been a frustrating year for sellers as buyer hesitation rules the market. Many buyers who feel priced out of the market have been waiting for a change in rates or prices that will make mortgage loans more affordable. Without demand, homeowners have less urgency to list, slowing inventory growth. The 2.7% year-over-year increase during the week ending August 23rd shows a marked decline when compared to the previous week’s growth of 4.9%.
Still, there are about 1.1 million properties listed nationwide, giving buyers some choosing power. While some buyers may stay on the sidelines to see how the rate drop plays out, others will likely jump in to get a lower rate while it’s available.
Buyers should also remember that home inventory varies considerably from one state to the next. States where inventory is piling up the most include Nevada, Maryland, North Carolina, California, and Arizona. Areas with increased inventory offer buyers more choices with less competition.
Home Prices Fall Flat
Home pricing has become a waiting game, in which both sides are waiting for the other to make a move. The summer buying season failed to take off, as high mortgage rates squeezed buyers, and sellers were hesitant to adjust prices to meet expectations. While buyers saw price reductions in June and July, many sellers are likely drawing back as buyer interest continues to weaken.
August showed flat year-over-year median listing prices, which could signal a period of pricing stability. However, buyers need to remember that home prices vary substantially by location, which could present opportunities for retirees who are still considering their ideal destination.
The national median home price rose to $422,400 in July. Yet, location plays a role here, too. Median prices vary substantially by state. For example, while the average cost in Florida is $433,600, the median price for a home in Alabama is $282,400. Currently, home prices are trending higher in the Northeast, where fewer homes are available, and lower in the South and West. Still, prices can vary from one city to the next, making location-specific research critical.
What 55+ Homebuyers Need to Know in a Changing Market
Sharp market turns can pressure homeowners to make a move. However, for many, staying the course will be a wiser decision. While lower interest rates create opportunities for buyers, affordable mortgages hinge on a buyer’s budget and credit risk.
As one of the most expensive purchases you’ll make in your lifetime, a home purchase should never be an impulse buy. Yet, when you’re in the market for a new home during your retirement, it can be difficult to determine if a rate cut could be a deciding factor. Your individual circumstances, financial stability, and lifestyle will help you determine if you’re prepared for the responsibilities of a mortgage loan.
Mortgage rate decreases might present the ideal opportunity when:
- You’ve thoroughly researched the market in your target area and are prepared to make a purchase.
- You’re already prequalified for a loan and understand the terms.
- You’re prepared to make a down payment and pay closing costs.
- You’ve analyzed your budget and can afford the payments along with the lifestyle you’ve planned.
- You have a good credit score, which will help you get the best loan terms.
Assistance for 55+ Homebuyers
While certain types of loans will allow borrowers to finance with lower down payments, a down payment of 20% or more has distinctive advantages. Reaching the 20% threshold allows you to avoid private mortgage insurance and reduces your monthly mortgage payment. Since you’re assuming more of the financial risk, you may be able to negotiate for more favorable mortgage terms. Yet, for many, a 20% down payment simply isn’t within reach.
Various down payment assistance programs can help 55+ buyers access the money they need. Homebuyer grants are one type of down payment assistance that doesn’t have to be repaid. If you qualify, you can use the money to pay part or all of your down payment. Some grants can also be used for closing costs. Eligibility requirements vary by program, but most require the home you’re buying to be your primary residence. Check out this list of homebuyer grants to get started.
Ready to Find Your Dream Retirement Home in 2025? We Can Help
Mortgage rate declines can improve loan affordability. However, they are only one factor in the homebuying process. It’s still too early to determine whether the rate decrease will prompt other changes. Yet, for buyers ready to enter the market, this could be a crucial opportunity.
For many retirees, lifestyle is a vital factor in finding the right home. Age-restricted communities are one way 55+ buyers can increase their options and enhance their lifestyle while staying within budget. If you’re looking for the ideal 55+ community, our resources can help you explore programs, locations, and communities that meet your lifestyle needs. Reach out today to get started on your journey to the right home and community!
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