30-year conventional mortgage rates will probably stay in a range of 5.00% to 5.50% from now until the end of the year.

Make sure you actually close a home before December 1, 2009 to qualify for the $8,000 first time home buyer tax credit

Who can predict how the market will turn in the next day, week, or year. That said, it's all about making a good and calculated risk. But the fact there is a la very generous tax credit available for first-time home buyers this year should help you make your decision:
http://www.filife.com/stories/the-8000-firsttime-homebuyer-tax-credit-is-available-now

I'd agree that the odds of an interest-rate spike are small. If you make any actual purchase offers, you should specify in the offer (and purchase and sale agreement) that the closing date will not be before whatever date you need to qualify as a first-time homebuyer.

Hi camp13. First, there's no reason to think that interest rates will be spiking for the rest of this year, and they may even come down a bit more. The Fed has made it clear that it's determined to use its powers to keep credit thawed for some time. So I wouldn't let today's interest rates unduly hurry you.

Second, remember that you actually buy the home (and hence qualify for the credit) at the time the transaction closes, not the time that an offer is accepted. So you could easily find a house you like in June, make an offer in July, set your closing date for late September.

Given these points, if I wanted to buy I'd start looking now, with an eye towards closing between late September and mid-November.