What to Expect in Q4 2024 and into 2025

If you’ve been dreaming of a brand-new home, there’s good news on the horizon—falling interest rates are making it easier than ever to turn that dream into reality.  Lower rates mean not only more affordable monthly payments, but also the potential to qualify for larger loans, giving you more flexibility in choosing the perfect new construction.  In this post, we’ll break down how falling interest rates can benefit you when purchasing new construction and why this is the perfect time to make your move.

What have interest rates looked like historically?

Just last week, the FED cut rates.  We should see another rate cut in November 2024!  Four different experts are expecting rates to continue to drop:

What does that mean for rates in 2025?  They are predicted to continue to drop. 

What does that mean for monthly payments?  

• .50% in Mortgage Rate Variation at $500,000 is $160/month. 
• .125% in Mortgage Rate Variation at $500,000 is is $88/month. 

What do falling interest rates mean for purchasing? 

• More competition between buyers
• Competition drives pricing 

What does that mean for home prices?  When houses become more affordable and competition rises, home prices also increase.  The lower interest rates will increase demand for housing, which will drive up the home pricing. 

In Central VA, the average home price increased 5% from 2023 to 2024.  This was due to a lot of inflationary factors in the economy.  That dollar amount is equivalent to $25,000.  

Let's say that you purchase a home now for $500,000 at the current interest rates.  Then, when the rates drop 1%, you refinance the loan to obtain a lower monthly payment.  With the refinanced monthly payment, you would be saving ~$250/mo.  On the other hand, if you wait to purchase, the rates will continue to drop, but the price increase of homes will offset the monthly savings. 

As the cost of borrowing drops, based on data, NOW is the ideal time to lock in your rate and secure a home that’s built to your specifications.  Why wait when you can purchase at a current pricing and then refinance your loan at a lower interest rate? 

Information provided by Vertical Builders' preferred lender, The Cowart Team.