You might be one of many buyers watching interest rates closely. Maybe you're not quite ready to buy yet, but you're hopeful that rates will drop soon, making things a bit more affordable.

At the same time, you might also be wondering...

"If rates drop, will a wave of new buyers flood the market and cause home prices to shoot up?"

That's a fair question -- but here's why I don't think you need to worry too much.

Rate Drops Will Likely Be Modest

Yes, mortgage rates may decline -- but it seems likely to be small, gradual drops, not a big swing. A drop from 6.5% to 6.0% (for example) will help some buyers a bit -- but it's not likely to trigger a dramatic surge in buyer demand.

Buyer Activity May Trend Up -- But Is Not Likely To Explode

Sure, lower rates could bring some hesitant buyers back into the market. But again, if the rate drop is modest, the increase in buyer activity is likely to be modest as well.

Prices Might Rise Slightly -- But Are Not Likely To Rise Sharply

If a few more buyers jump in, home prices could trend upward -- but probably not in a sudden or extreme way. A small drop in rates might lead to a small increase in buyer activity might lead to a small amount of upward pressure on prices.

So... What Should Buyers Do?

Don't wait to buy just because you're hoping for a lower mortgage interest rate -- they might not drop significantly.

But also, don't rush to buy before rates drop, fearing a price spike -- because big price jumps are unlikely.

If you're not ready to buy for 3, 6, or 9 months, that's okay. The market likely won't shift drastically in that time.

Focus on buying when it's right for you -- financially, logistically, and personally. Not just based on what rates might do.