The residents were evacuated Thursday as the river spilled its banks and covered Iowa Highway 3, the main route through the Bremer County community of about 8,500 people.
Most stayed with family members or at shelters set up at area churches and a local college. They were expected to return to their homes to survey the damage Friday.
"I grew up here and I can remember the river flooding a lot when I was a boy, but we haven't had a flood like this for quite sometime," Police Chief Arthur Simpson said Thursday.
Waverly was cut in two as the river crested in the morning at slightly more than 21 feet, two feet higher than the previous record set in 1993. As many as 650 homes and a dozen downtown businesses were affected. No injuries were reported and a damage estimate was not available.
Electricity in Waverly was shut off and residents were told to lock their doors as they left Thursday night. City engineer Mike Cherry said about 200,000 sandbags had been placed around town and at the city's water and sewage plant facilities.
Heavy rainfall caused flash floods that carried away trailers and stranded people on their roofs. One man was missing after his car was washed off a flooded road.
In addition waters were rising a few miles downstream in the adjoining cities of Cedar Falls and Waterloo, where residents were bracing for near record flooding when the river crests Friday afternoon.