Should I Sell My Home Now? Weighing the Pros and Cons in a Market with Falling Mortgage Rates

Is now the time to list?

Should I sell my home now? That’s currently a very perceptive question that many homeowners should be asking themselves.

Let’s consider how the housing market looked when this was written. According to Mortgage News Daily, mortgage rates had just dropped to their lowest level in 17 months. Freddie Mac’s data suggested they were one day’s moderate fall away from a 20-month low.

Better yet, it was hard to find a mortgage rate expert who didn’t think things would carry on getting better. Most weren’t anticipating sharp falls. But they expected a gentle drift lower through the rest of 2024 and 2025.

No wonder many homeowners, who’d felt trapped in their homes by rising mortgage rates that made moving on intolerably expensive, were asking themselves, “Should I sell my home now?” Or, at least, soon.

In this article (Skip to...)

• Impact of falling mortgage rates
• Pros of listing when rates are falling
• Cons of listing when rates are falling
• Evaluating your home selling options
• The bottom line

Understanding the impact of falling mortgage rates

Falling mortgage rates are typically central to the should-I-sell-my-home question. Lower rates not only make it easier for existing homeowners to transition into their next home, but they also draw in first-time buyers.

For years, aspiring homeowners have had to sit on the sidelines as climbing mortgage rates made monthly mortgage payments increasingly unaffordable. But each downward movement brings lower payments and tempts more first-time buyers into the housing market.

Of course, homeowners who sell don’t generally want to lose the benefits of homeownership. And most go on to buy another home. So, those people join first-timers in the market, creating a new level of demand.

Meanwhile, the supply of new homes has largely stalled. The Census Bureau reckons that new building permits in August 2024 were 6.5% lower than the same month in 2023, although some forecasts predict a small recovery in 2025.

Home prices

You might assume, given the laws of supply and demand, that all this would drive home prices higher. But this is yet to happen appreciably and may not begin for some time.

Each month, Fannie Mae publishes the views of a panel of 100 housing experts across the industry and academia. In its September 2024 report, it said the panelists expect home prices to rise 4.7% in 2024, 3.1% in 2025 and 3.3% in 2026.

And a slowing in home price inflation seems to be reflected on the ground. Realtor.com’s August 2024 monthly housing market trends report says, “The share of listings with price cuts reached the highest for an August in over five years, increasing by 3.1 percentage points compared with last year to 19.3%.”

This lag may provide an opportunity for sellers who are planning to upsize to a larger, more costly home. Should you close on your existing $200,000 home in January of 2025, and buy a $400,000 one? Or wait another year?

Assuming Fannie’s figure of 3.1% for home price inflation is correct and applies to both homes, your current property would appreciate to $206,200 on 1/1/26. But your new place will cost you $412,400 that day. You lose a bit over $6,000 by waiting.

Pros of listing in a market with dropping mortgage rates

Perhaps the main advantage of selling your home when mortgage rates are falling is the extra number of people seeking homes. Whether they’re homeowners looking to move or first-time buyers, you can expect a packed open house and more buyers touring your home.

If you’ve made your home attractive to purchasers and have priced it competitively, you may well end up with multiple offers. And one or more of them may be higher than your asking price.

Another important advantage is that, as the housing market where you live gains momentum, things will begin to move faster. And the average number of days each home remains on the market should drop.

Few things are more disheartening than putting your cherished home on the market, only to watch it linger for months, overlooked and unappreciated by potential buyers. But, with more favorable selling conditions, those days may soon be over.

Falling mortgage rates could change your answer to the question, “Should I sell my home?”

Cons of listing in a market with dropping mortgage rates

There again, there are downsides to listing amid falling mortgage rates that might affect your “should I sell my home” question differently. Because there’s a flipside to each of those pros when you search for a replacement home and become a homebuyer.

When mortgage rates are rising, you can take your time. There may not be many homes for sale, but you can pick the one you like best and stand a good chance of closing on it. In other words, you’re a buyer in a buyer’s market.

And it’s a lot less fun when yours is one of several competing bids than it is when you’re a homeowner receiving those offers.

As importantly, you’ll likely lose the luxury of time. Sellers are rarely willing to accept an offer with a long closing date or loads of contingencies when they have the option of wrapping things up in weeks.

Should I sell my home? Economic uncertainty

Economists have been debating the likelihood of a “soft landing" since mid-2021. One of those happens when the Federal Reserve pulls off the rare trick of reining in too-high inflation without triggering a recession. And economists still can’t agree whether the Fed’s going to succeed this time.

Of course, as an old song once nearly said, “Economics and uncertainty go together like a horse and carriage. You can’t have one without the other.” And there’s never a time when it’s 100% certain that you should answer yes to our “should I sell my home” question.

However, there’s a heightened risk at a time like now when the housing market looks set to change. The chances of a sudden reversal or acceleration are much higher during periods of flux.

Naturally, you can always just withdraw your home from the market and stay put if things suddenly move to your disadvantage. Unless, of course, you’ve already committed to a purchase without first agreeing a sale.

So, it may be wise to proceed with caution, at least until the economic outlook becomes clearer. You can never eliminate risk but now might be a good time to moderate it.

Evaluating Your Home Selling Options

One way of moderating your risk is to plan your home’s sale and your purchase carefully. See this is a key part of your long-term financial strategy, not least because it is.

Assess your personal circumstances

Are your finances in good shape for a mortgage application? Lenders will look at your credit score, existing debt burden, down-payment size, and employment record when deciding the mortgage rate it will offer you.

Click the links to learn more about the main qualifying criteria and perhaps to find quick ways to improve yours.

A low mortgage rate will allow you to afford a more costly home or keep your monthly payment low. So, it’s definitely something to take seriously.

Take time to choose the type of mortgage that suits you best. It can make a big difference. For example, if you have an FHA loan and can come up with a 20% down payment, you might qualify for a conventional loan. And then you need never pay costly mortgage insurance premiums again.

Don’t forget to take into account likely changes to your lifestyle. These might include relocating for your work, getting married, growing your family, caring for elderly parents or whatever.

Obviously, you should take these into account when choosing your next home. But they could also affect your choice of mortgage. For instance, if you’re pretty sure you’ll move again within a few years, you could be better off with an adjustable-rate mortgage (ARM) than a fixed-rate one.

Finally, see how your move fits in with your long-term financial objectives. Don’t have any yet? Now might be a good time to set some. Consider talking to a reputable financial advisor.

Weigh the pros and cons

Ask yourself why you want to move. All reasons are legitimate. But some are more pressing than others.

For example, getting a new job in a different state creates a need to relocate. But shaving 10 minutes off your commute might be a want. Escaping an unsafe neighborhood could be essential. Moving a few miles closer to your family might be a need or a want, depending on why you’re doing it.

The more significant the reason behind your move, the more willing you’ll be to absorb the financial impact that comes with it.

Now examine those financial implications closely. Check out:

• How much you’ll likely get for your existing home — Get in a few reputable real estate agents and ask them
• What you can afford to pay for your next home — Use our mortgage calculators
• Whether you’re happy with the sort of home you can afford — Look online at listings where you want to buy
• Whether you should take time to improve your credit score and other financial indicators to get a lower mortgage rate
• How big a down payment you can scrape together — Don’t forget there will be closing costs, too
• How all this fits in with your financial objectives

Remember, your financial priorities are important but they may be overridden by a pressing need to move.

Should I sell my home? The bottom line

Moving home is inevitably an emotional time. And it’s fine to dream about life in your wonderful new place.

But the financial implications are crucial, too. So, try to balance your natural exuberance with a level-headed approach to the money side.

And weigh the benefits to your personal life against the changes to your personal finances. You don’t need to be completely analytical, but it’s usually unwise to make impulsive decisions during such an important life transition.

So, take your move as seriously as it deserves, researching all the elements that allow you to reach an informed decision. You’ll be glad you did.