Last Call: The Buyer’s Market May Be Closing

This week’s inspiration comes from Semisonic’s 1998 hit Closing Time. Much like the final call at a bar, prospective homebuyers may soon face the end of a rare window of opportunity. For the past two years, elevated mortgage rates and a slowing economy have shifted the housing market toward buyers, driving sales to their lowest levels in more than two decades. Sellers, in turn, have been compelled to cut prices, offer concessions, and fund rate buy-downs to attract offers.

That dynamic may be about to change. Mortgage rates, which hovered above 7% for much of the year, have now dropped sharply – conventional loans are sitting just above 6%, while FHA and VA loans are already in the high-5% range. Historically, a drop below the 6% threshold has served as a catalyst, reigniting demand almost overnight. Over the past three years, each dip under this line has been met with a surge in homebuying activity, often reversing buyer leverage in a matter of weeks.

Next week’s Federal Reserve meeting could accelerate this shift. Should policymakers deliver the expected rate cut—or signal a more dovish trajectory—conventional mortgages may slip below 6%. That would likely mark the end of widespread seller concessions. As activity heats up, sellers become less inclined to negotiate, and bidding wars tend to re-emerge, pushing effective sales prices higher despite lower financing costs.

For buyers who have been waiting on the sidelines, this paradox is important. Lower interest rates undeniably improve affordability on a monthly payment basis, but those savings can be quickly offset by higher sale prices and reduced closing incentives once competition returns. In other words, today’s buyer’s market—characterized by price reductions and seller-funded buy-downs—may actually represent the best overall deal, even with rates a quarter-point higher than what could be available in the weeks ahead.

The broader economic context underscores the urgency. With inflation easing, labor markets softening, and Treasury yields falling, mortgage rates have room to decline further. But as history has shown, affordability is a double-edged sword: while falling rates open doors for more buyers, they also slam shut the brief period when negotiating leverage favors them.

It may, quite literally, be “last call” for those hoping to secure both lower monthly payments and favorable purchase terms. Waiting for marginally lower rates may mean stepping into a market where buyers once again compete fiercely for limited inventory.

For now, the choice is clear: seize the advantages of a cooling market while they last—or risk entering a seller’s market where the only thing closing is the deal, not the gap in affordability.