Will Interest Rates Fall Before the End of the Year?

One of the questions I get asked more than almost any other is, "Should I wait for interest rates to come down?" The honest answer is... nobody knows for sure. The Federal Reserve has made it clear that inflation remains its biggest concern, and as long as inflation stays elevated, interest rates are likely to remain higher than many buyers would like. Financial markets continue to adjust their expectations almost daily based on new inflation reports, employment data, energy prices, and global events.

Over the past month, inflation showed one of its largest declines in quite some time, which was certainly encouraging. Much of that improvement has been attributed to lower energy prices after tensions in the Middle East temporarily eased. Since then, however, oil prices have become more volatile again as conflict with Iran has resurfaced, and new tariffs announced this week could also put upward pressure on prices if they increase the cost of imported goods. Neither of those events automatically means inflation will rise, but they are exactly the kinds of factors economists will be watching over the coming months.

For the Austin housing market, higher interest rates generally continue to put downward pressure on home prices because affordability becomes the biggest obstacle for buyers. That's one of the reasons we've seen home values normalize over the past few years after the extraordinary run-up in 2020 and 2021. The good news is that Southwest Austin remains one of the healthier parts of the market. Well-priced homes in desirable school districts are still attracting strong interest, while buyers have significantly more negotiating power than they did just a few years ago.

My advice hasn't really changed. If you're waiting for the "perfect" interest rate, you may be waiting longer than expected. But if you find the right house at the right price, you can always refinance if rates come down in the future. You can't go back and buy today's home at today's price if values begin rising again. The best time to buy has always been when the house fits your family's needs and the monthly payment fits comfortably within your budget.