The economic news cycle is buzzing with signs of a potential recession—rising tariffs, talks of a trade war, and unpredictable stock market activity. Amid the uncertainty, mortgage rates have seen a slight dip, prompting some prospective homebuyers to wonder if a downturn could bring benefits like more affordable interest rates and lower home prices.
Having spent over two decades in real estate, I’ve seen the market ride high and crash hard, including during the 2008 crisis. Whether now is the right time to buy a home depends on more than just economic headlines. If your finances are solid and you’re ready, purchasing a home—even in a volatile market—can still be a wise decision.
Although we’re not officially in a recession by definition, many of the signs are present. Layoffs are increasing, GDP growth is slowing, and consumer confidence has taken a hit. Inflation may not be rising as fast, but the cost of living remains high, putting pressure on household budgets. For many Americans, it already feels like a recession, especially when every trip to the grocery store feels like a financial strain. These realities shape how people view large financial decisions, like buying a home.
Interest rate cuts from the Federal Reserve may be on the horizon, possibly coming by the summer. The Fed faces a tricky situation—it’s trying to cool inflation without triggering more instability. And while lower interest rates would eventually help the housing market, mortgage rates aren’t directly set by the Fed. They’re influenced by a variety of factors, including the bond market and investor sentiment. Even if the Fed does cut rates, don’t expect mortgage rates to plummet. Much of the expected movement has already been anticipated by the market.
In previous economic downturns, mortgage rates typically fell. That pattern helped stimulate the economy, as we saw during the 2008 financial crisis and again in 2020. However, the current situation is more unpredictable. Even if rates dip, they can quickly rise again with any hint of positive economic news. Most experts forecast that the average 30-year fixed mortgage rate will fluctuate between 6.5% and 7.25% through 2025. Hopes of returning to 4% or 5% interest may be overly optimistic unless there’s a severe economic downturn.
Your individual financial situation matters more than chasing the lowest rate. A stable income and long-term mortgage strategy can make homeownership a smart move even when rates aren’t at historic lows. Waiting too long for an ideal rate could mean missing out on other advantages.
When it comes to home prices, a dramatic nationwide drop is unlikely. While a recession could cause values to dip in certain areas, especially those dealing with high insurance premiums, taxes, or frequent natural disasters, the overall market remains tight. Inventory remains low across much of the country, and with high construction and labor costs, home prices aren’t likely to fall significantly any time soon. The 2008 crash was a unique situation, not the standard in recessions.
For buyers who are in a strong financial position, a recession might actually present a good opportunity. You could benefit from less competition, better pricing, and increased room for negotiation. However, as lending standards tighten, especially for properties like condos, securing financing might become more challenging. Economic uncertainty also affects buyer behavior—when people feel financially vulnerable or see their investment accounts drop, they tend to delay major purchases like homes.
Ultimately, the best time to buy a home is when it aligns with your personal readiness. A stable job, good credit, and a long-term mindset are more important than trying to predict the perfect market moment. Rather than waiting for an ideal window that may never come, focus on being prepared, doing your research, and working with a trusted real estate team. Even during uncertain times, smart decisions can still lead to successful outcomes.