If you’re a first-time homebuyer, entering the housing market can feel like stepping into a different world, especially with all the changes over the past few years. With shifts in mortgage rates and varying inventory levels, understanding the current outlook can be particularly valuable when buying a home.
In this blog, we’ll discuss some of the noticeable trends happening in today’s market and share tips that can help you navigate the homebuying process with ease.
The Current State of Affairs
A critical factor in determining how much home you can afford is mortgage rates. Currently, the average rate for a 30-year fixed-rate mortgage is hovering around 6.75%. At the time of writing this blog, most experts aren’t predicting a substantial drop in rates soon. This means if you’re waiting for rates to plummet, you might be on the sidelines longer than expected.
Other factors shaping the current environment are housing demand and home prices. According to recent data from the National Association of Realtors (NAR), home prices are experiencing a more moderate growth rate compared to previous years. This trend is primarily driven by limited inventory and consistent demand, especially for new homes. NAR predicts a 9% rise in existing home sales and an 11% rise in new home sales, with the median home price increasing to $410,700 in 2025, up 2% from last year.
The economy also plays a big part in the housing market. When people feel unsure about the economic future, they’re less likely to buy a home. According to Fannie Mae’s latest economic forecast, the U.S. economy started 2025 strong, with good job numbers and people spending confidently. Even though the new presidential administration’s tariff policies could shake things up a bit, their effects are likely to be modest, the agency reported. Still, it’s something to be watched closely.
Being Strategic in a Competitive Market
In a competitive market like we’re seeing today, securing your dream home requires a blend of savvy planning and strategic action. While the market may seem daunting, especially for first-time buyers, there are ways to achieve your homebuying goals.
The first step is making sure your credit score is as high as possible. A higher credit score not only boosts your chances of getting approved for a mortgage, but it can also help you secure a more favorable mortgage rate. When preparing to buy a home, it’s generally a good idea to pay down your existing debts and avoid taking on new ones. This improves your debt-to-income ratio, which is one of the most important factors lenders consider.
When you’re ready to start shopping for homes, another wise move is to get preapproved for a mortgage—not pre-qualified—as soon as possible. A loan pre-approval involves a more thorough check of your financial background, and it shows sellers that you are a serious buyer, which can be a crucial advantage if you end up in a multi-bid situation.
Lastly, when buying a home in a tight market, keep an open mind and be flexible. Consider broadening your search to include smaller homes, fixer-uppers, or those in less competitive or emerging neighborhoods. Even a home that doesn’t initially meet all your criteria can grow in value over time. Plus, you may have the added benefit of customizing the home to meet your needs and style. By being flexible, you’ll give yourself more options.
Choosing the Right Lender
While the housing market’s fluctuations are beyond your control, you do have the final say in choosing your lender. This decision is crucial, as it greatly affects both your buying experience and the overall success of your home purchase.
A good lender will have expert loan officers who can demystify the complexities of mortgage terms, rates, and fees and will help you find a mortgage product that suits your financial needs. For instance, some lenders might offer better terms for first-time buyers or have products specifically designed for self-employed individuals.
Great lenders will also help you start your homebuying journey with confidence. For example, Right By You Mortgage offers a unique on-time closing guarantee designed to reduce the stress typically associated with buying a home. If your closing does not happen on time, we’ll compensate both you and the home seller $500. This guarantee is applicable for all conventional and VA loans, provided certain conditions are met.
Ready to put your dreams of buying a home into action this year? Our loan experts are happy to help. Find a local loan officer near you or email us at inquiries@rightbyyoumortgage.com today.
For example purposes, a home worth $625,000 obtaining a 30-year fixed-rate mortgage with 20% down at a note rate of 7.00% and an APR of 7.028% would have a principal and interest payment of $3,326.51.
