By Alice Kantor

Housing became more affordable in recent weeks, but millions of would-be buyers are still being priced out of the market.

In early January, the Trump administration said the government would subsidize $200 billion in mortgages. Mortgage rates have softened, with the 30-year fixed-rate mortgage dropping to 6.11%, near its lowest level in years, according to Freddie Mac.

"We expect affordability to improve this year," Redfin's Chief Economist Daryl Fairweather, said.

While mortgage rates are down, listings are also staying on the market longer, at a median of 39 days per home, according to the trade group National Association of Realtors, giving buyers more leverage. Despite signs of a slowing market, prices remain sticky -- up 1.1% year-over-year the past month -- due to low construction rates of new-home construction, according to Fairweather.

This decidedly mixed picture leaves consumers in a quandary: Is now the right time to buy a home?

Jovan Johnson, founder of Atlanta-based financial planning firm Piece of Wealth Planning, says there's no one-size-fits-all answer to that question as it depends on personal financial circumstances.

Mortgage rates aren't the only metric to take into account when purchasing a home, he said.

When budgeting, people need to keep in mind closing costs, furnishings, property taxes, insurance, repairs and maintenance and homeowners association fees. "The right time to buy is when you can afford all of those expenses while still having room in your budget for other priorities," he said.

Still, Johnson points out that it's often better to purchase sooner rather than later to build equity.

Waiting longer to pull the trigger won't lead to a big mortgage-rate reduction and could have a damaging effect if house prices increase in the meantime. "Waiting years to save more can backfire," he said, "The key is to run the numbers."

Despite lower mortgage rates, affordability continues to be an issue for many, said Jessica Lautz, deputy chief economist for the National Association of Realtors.

The price of existing homes has climbed continuously in the past three years, she said, with the median existing home sale price now at $405,700.

"For many potential home buyers, especially first-time buyers, [getting on the ladder] remains out of reach," she said.

Prospective homeowners are getting more leverage in a cooling market, though, with the typical seller receiving only two offers per listing, according to Lautz.

For first-time buyers, imperfect properties that are in lesser demand might be a way to achieve homeownership, she said.

"Properties that have been on the market for longer periods of time or that need minor improvements can offer opportunities for buyers who are willing to put in the work," she said.

As for trying to time the market and rate drops, that strategy can be risky, warned Erik Schmitt, a home lending managing director at JPMorgan Chase, as rates are volatile and fairly unpredictable.

He recommends instead locking a rate while looking for a home. Some banks offer the option to lock rates for 90 days, for instance, protecting home buyers from market changes.

"A rate lock helps provide peace of mind," he said.

Shailendra Kumar, director of financial solutions at Fidelity Investments, recommends looking for a home that is no more than three to five times one's total annual household income.

In terms of down payment, he advises buyers to save at least the equivalent of their household's annual income before purchasing a home. This should cover a down payment, he said, and other upfront expenses associated with buying a house.

The debt-to income ratio also matters, he said. It is calculated by dividing monthly debt payments -- such as mortgages, loans, credit cards -- by gross monthly income.

Lenders tend to limit that ratio to around 36% to 46%. Kumar says staying close to 36% is better to prepare for other expenses, such as insurance, maintenance and tax. "Just because a bank tells you that you can borrow a certain amount doesn't mean you should," he said.

Today's market rewards buyers who have long-term resilience over those making quick purchases, said Bill Schultheis, director of financial planning at California-based advisory firm Edelman Financial Engines.

There are fewer opportunities for house flips, for instance, and prices aren't rising as fast as before, making housing equity as an investment less appealing, he said. As a result, being able to hold a purchase for longer is becoming more important.

"A longer holding period, ideally five to 10 years or more, helps smooth out market cycles and makes a purchase less sensitive to short-term price fluctuations," he said.

Schultheis advises to budget for housing costs that make up about 25% to 35% of take-home pay. He favors a 20% minimum deposit to avoid having to pay private mortgage insurance.

For those who want real estate exposure without the hassles of ownership, real estate investment trusts (REITs) are a good alternative, he said.

"A low-cost publicly traded REIT offers a more efficient and flexible alternative to a home purchase," he said.

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February 07, 2026 04:00 ET (09:00 GMT)

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