Mortgage rates began falling late this summer as worrying economic indicators (rising unemployment) led investors to believe the Federal Reserve would begin cutting rates. Leading up to the Fed’s Sept. 18 jumbo rate cut, mortgage rates had reached their lowest point in roughly two years. However, since then, rates have increased rapidly in response to strong economic data, specifically September’s labor report, even while inflation continues to ease.  This is leaving many buyers opting to remain on the sidelines in the hopes that further Fed cuts later this year will lead to more mortgage rate declines.

Although home prices continue to break records, price growth is slowing due to loosening inventory and sluggish demand. At the same time, buyers are gaining purchasing power and leverage when negotiating with sellers.

However, many experts say that now is the best time to take advantage of improved market conditions and get ahead of a potential demand surge that could put upward pressure on home prices and leave many would-be buyers out in the cold.

U.S. home prices posted a 5% annual gain, according to the latest S&P CoreLogic Case-Shiller Home Price Index three-month running average that ended in July.

Although home prices have decelerated—the July gain reflects a slowdown from the 5.5% annual gain in June—the index still reached another record high, indicating that home prices remain out of reach for many would-be buyers.

So, where will home prices go this fall?” Lisa Sturtevant, chief economist at Bright MLS, posed in an emailed statement. “It is possible that lower rates this fall could actually come along with slower home price growth as more sellers get into the market and inventory continues to rise.”

A senior economist at Realtor.com, agrees that home price growth will slow—but then rebound : “there is a significant chance that the rate of home price growth will bottom out over the next months and then reaccelerate at the end of the year or at the beginning of next as the purchasing power of homebuyers begins to reflect a more favorable rate environment,” According to Realtor.com

Given these expectations, experts warn would-be buyers against waiting for more mortgage rate drops to avoid getting caught in a demand wave that reignites home price growth and puts homeownership out of reach.

**Mortgage rates constantly change, but there’s a good chance they’ll fall this year. To get the lowest rate, shop around and compare offers from different lenders.