Skip to navigationSkip to main contentADVERTISEMENTSome offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure.Hal Bundrick, CFP® · Senior WriterUpdated Wed, June 17, 2026 at 9:26 PM GMT+2 9 min read2026 began with a roller coaster of home-buying signals. Mortgage rates fell to three-year lows, then rose with oil prices at the beginning of the Middle East war, and now there’s a peace deal in the mix. Home prices are moderating, sellers are reducing their listing prices, and houses are staying on the market for longer, but what’s next?Given the factors in the 2026 housing market, is this a good time to buy a house?MORE: See our top picks for mortgage lenders for low or no down payments.Understanding the current housing marketGood news for anyone looking to buy a house soon: There are signs of improvement. According to the Realtor.com February 2026 Housing Market Trends Report, there are indications that the real estate market has become more balanced since this time last year.Active listingsMore homes are on the market overall. Active listings have now grown year over year for 30 consecutive months, but the market is balancing out, with inventory up just 2.2% compared to this time last year. That steady, more measured growth still means you have more options than a year ago.Price reductionsIn February, the national average of homes with price reductions was 15.5%. However, 2026 may see more sellers begin with lower beginning list prices, "rather than cutting after seeing their home sit for longer than anticipated," the Realtor.com analysis noted.Time on the marketIn May, the share of active listings with a price reduction was 17.5%, but that figure was actually down 1.6 percentage points from a year ago. Rather than cutting prices after sitting on the market, sellers appear to be doing their homework upfront. "List prices are down at a record pace, but price reductions are also down," said Danielle Hale, chief economist at Realtor.com. "That combination tells you sellers are doing their homework before listing, not after."Mortgage ratesAccording to Freddie Mac, the 30-year fixed rate is currently around 6.52%, which is down from 6.84% a year ago and well below the 7%+ highs seen in 2025. While that may still feel high compared to 2020 and 2021 rates, the overall trend is moving in the right direction for buyers.At its March 18 meeting, the Federal Reserve announced another hold on further rate cuts. However, mortgage rates closely track the 10-year Treasury yield rather than the fed funds rate.To navigate today's mortgage rates, consider:More than half of home loan borrowers (56%) only get a preapproval from one lender. That reduces your bargaining power and limits the opportunity to find a better interest rate from a more business-hungry lender. Zillow research says that 45% of first-time home buyers who shopped with multiple mortgage lenders got a better rate.Putting down a larger down payment can earn you a better mortgage rate.Some buyers get below-market mortgage rates by negotiating a buydown or special financing from a seller or builder.Take action: Use a mortgage calculator to determine the monthly payment you can afford. You can then learn the home price, down payment, credit score, type of home loan, and mortgage interest rate to meet your home-buying goal.This embedded content is not available in your region.Learn how to get the lowest mortgage rates.Home inventoryNew home construction remains a persistent issue. Builder confidence has now been below the break-even threshold for 26 consecutive months, with the latest June reading at just 35 out of 100.Rising construction costs, elevated mortgage rates, and economic uncertainty continue to weigh on sentiment. "The housing market remains soft as higher mortgage rates, rising gas prices and economic uncertainty continue to dampen buyer demand," NAHB Chairman Bill Owens said.Zillow's forecast of 2026 being the slowest year for single-family construction starts since 2019 appears to be on track, as builders continue to hold back on new projects given the large inventory of homes already built or underway.Learn more about housing inventory and how it’s calculated.Is it a good time to buy a house?To answer the question of whether it's a good time to buy a house for you personally, you must look beyond broad market forces. Buying a home is more than considering macroeconomic factors. It's an important life decision based on your personal and financial situation.Where do you want to be in five years?When you rent, the decision to move is broken down into six months, or a year or two at a time, as your lease renews. But every dollar-related detail makes a home purchase a medium- to long-term investment. Buying a house includes various costs: the down payment, closing costs, and financing fees, moving expenses, property taxes, and perhaps selling the house you're in now.Homeownership requires a long timeline. How you make a living, your friends, family, and even community amenities all come into play.Your incomeA primary consideration: your job. Will it require a location change anytime soon, or can you live where you please? Is your income steady and all but assured?Your credit scoreOne of the significant factors that will qualify you for a home loan is your credit score. It's important to know it before applying for a mortgage.For the most common loan, a conventional mortgage not backed by a government agency, you generally need a FICO Score of 620 or better.FHA loans can allow a credit score as low as 580 with 3.5% down. VA loans issued to qualified military service members and veterans don't officially have a minimum credit score, though some lenders will require a FICO Score of 620.Of course, minimum credit scores are the entry-level to qualifying; the higher your score, the better the loan terms you'll be offered. Most importantly, that can mean you'll pay a lower annual percentage rate over the life of the loan. You may also have more room to negotiate on fees.As a benchmark to where you stand, the median credit score on a new mortgage in the fourth quarter of 2025 was 775, according to the New York Federal Reserve.See the average mortgage rate by credit score.Your current debt loadA primary financial metric lenders will use to determine your creditworthiness is your debt-to-income ratio.Fannie Mae, a government-sponsored entity that provides liquidity to the home loan market, looks for a maximum total DTI ratio of 36% of "the borrower's stable monthly income." Exceptions can allow for total DTIs up to 50%, but it's usually best to avoid working on the edges of qualification if you can.You can calculate your DTI by dividing your total recurring monthly debt by your gross (before taxes and other deductions) monthly income.Include debt such as monthly mortgage payments (or rent), real estate taxes, and homeowners insurance. Also, include any car payments, student loans, and the minimum monthly payment due on credit cards. Remember any personal loan payments, child support, or alimony.Do not include debt such as monthly utilities — like electricity, water, garbage, or gas bills — or car insurance, television streaming subscriptions, or cell phone bills. You can also exclude health insurance costs and miscellaneous expenses such as groceries or entertainment.Your savingsHaving a cash cushion in the form of emergency savings shows lenders that you are prepared for the unexpected. Of course, that savings account should also include …Your down paymentA large chunk of your savings account should be dedicated to the down payment. A minimum down payment of 3% is required to qualify for a conventional loan targeted at first-time home buyers — or ideally, 20% to avoid private mortgage insurance. Yes, zero-down options exist if you are eligible for a VA- or USDA-backed loan.According to Realtor.com, the median down payment has been falling as the market shifts in buyers' favor, dropping to $23,400, or 12.8% of the purchase price, in the first quarter of 2026. That's down nearly 19% from a year earlier and the lowest level since 2021Your next moveBuy smart and shop a lot. Relentlessly shop interest rates and mortgage lenders for the best loan offers and justified fees. Get a written preapproval from your lender, then shop for a house you can love and can afford. Your home buying competition is.According to Zillow, when it comes to first-time buyers versus repeat buyers, first-timers are more likely to reach out to at least three lenders and three real estate agents.MORE: Learn about the best mortgage lenders for first-time home buyers.Is it a good time to buy a house? FAQsShould I wait for a recession to buy a house?Mortgage rates tend to fall during economic downturns, so a recession would definitely qualify as a time when rates would likely drop. However, lower rates generally increase demand as more buyers enter the market, so house prices would likely rise. Buying a house at a time when both mortgage rates and home prices are favorable is a challenge. You probably shouldn't try to time the housing market by waiting for a recession. Buy when it makes sense for you personally.Is it smart to buy a house right now?There are pros and cons to buying in today's housing market. For example, home prices are cooling off, but sales prices remain unaffordable for individuals who have experienced recent job losses or furloughs. Deciding whether it's a "smart" time to buy a house is less about timing the real estate market and more about evaluating your financial situation. Can you comfortably afford the down payment, closing costs, and monthly mortgage payment? Do you expect to stay in the home long enough to recoup the money you pay up front? Then it could be a smart time for you to buy a home.Is now a good time to lock in a mortgage rate?Locking in a mortgage rate is a short-term decision, generally lasting only 30 to 60 days — sometimes up to six months. There's little reason to agonize over it. Be comfortable with the rate on your Loan Estimate and start packing boxes.Will U.S. housing ever be affordable again?Homes become more affordable as your income and savings grow. Ask any homeowner: Buying that first house was a stretch. The monthly payment loomed large. As months and years go by, it becomes less of an issue. Then, as home prices continue to rise, you're on the right side of the equation: The growing home equity builds your net worth.