Mortgage rates are falling. Here’s what you should know before buying a new home

(CNN) — Homebuying in the United States has recently slowed to a crawl, but falling mortgage rates could soon jolt it back to life.For potential homebuyers who may have been itching to come off the sidelines, the recent drop in mortgage rates may be a double-edged sword.Lower rates could give homebuyers more purchasing power. However, they could also lead to more intense competition for homes on the market, driving record-high home prices even higher.“It’s one of those things where you should be careful what you wish for,” said Greg McBride, the chief financial analyst at Bankrate. “A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.”Lower mortgage rates could lead to more competitionA home tends to be the largest single purchase a person makes in their lifetime, and lately, the price tag of that purchase has skyrocketed.The affordability issues that plagued the US housing market for years only intensified after the Federal Reserve began aggressively hiking interest rates in its fight against inflation more than two years ago as home prices climbed to record highs.However, according to Freddie Mac, the average 30-year fixed mortgage rate fell to 6.46% last...