Affordable real estate for young Americans has been at historic lows in recent years, due to the double whammy of inflated home prices and high mortgage interest rates. Elevated mortgage rates are slow to decline, but the process is underway. As if to contradict the rudimentary law of supply and demand, new home sales in August jumped an “unexpected” 20.5% nationwide.

There must be a reason, and of course, there is a rationale for so many sudden buyers. When homebuilders are faced with a softening market, they pull a few rabbits out of their collective hard hats. Price reductions are being offered, and builders have been financially creative with their offerings. Providing fewer upgrades from “builder quality” reduces builders’ costs, and buyers are loving the resultant lower prices. Many builders are offering creative financing options, including mortgage interest rate “buy-downs” for the first few years.

Ultimately, the real estate market will be best stimulated by a general reduction in interest rates. Mortgage rates are not directly impacted by Federal Reserve (FED) actions, but as the FED eases monetary policy, mortgage rates will follow the trend. The first rate cut in this cycle has been implemented, and more will follow. Mortgages will become less expensive over the next several months, and smart buyers will capitalize on the friendlier rate environment.

Buyers and sellers alike must pay attention to interest rate fluctuation. Timing a real estate transaction for maximum personal benefit is tricky work, as the goals of buyers and sellers often conflict. Deals are made, and sales get completed, only when buyers and sellers are both satisfied, if not ecstatic.

Buyers need to remember that their monthly payments are changeable later by refinancing, while sellers experience a “one and done” transaction. In my view, buyers have the financial advantage over time. It would be a mistake to pass on a home you love without considering the probability of a refinancing possibility in a reasonable amount of time.

Potential buyers should be attuned to creative financing available at any time in the rate cycle. Regardless of the buyer’s intention to stay in the home for a short or long period, an Adjustable-Rate Mortgage (ARM) should be considered. Initial interest rates on ARMS are lower than those of Conventional 30-year fixed mortgages. In subsequent stages of a softening interest rate market, ARMS can be refinanced when the time is right.

Every month spent paying a lower ARM interest rate lines the pockets of the homeowner. Savings accrue until the mortgage is refinanced, hopefully at a significantly lower rate. Once the lower rate is locked in for 15 or 30 years, the overall lifetime cost of the home purchase will be minimized.