When Is The Best Time To Buy A House?

Reading Time: 6 minutes

Buying a home is ultimately a subjective decision which should be made based on your personal situation, however factors like the season, the housing market and interest rates, can impact your decision in a big way.

Key Points

There are no hard and fast rules for the timing of buying a home. Real estate agents will often tell you that the right time to buy is now. Some experts say that the time of year matters, and others disagree with this. You can certainly find homes at any time of the year, but the real estate market may be doing different things, and this can be a deciding factor for buying a home. There are a host of aspects that can impact the market and your decision, so when is the best time to buy a house? Let’s take a deeper dive into this…

Your personal situation

Buying house

Finances: When you’re buying a home, not only will you need to qualify for a mortgage, but you’ll also need to have a sufficient down payment ready. Then you’ll need enough funds to take care of taxes, insurance, home maintenance and any other costs that crop up once you’ve bought the home. Buying a home is much more than just preparing for the mortgage, so bear this in mind when you’re crunching the numbers to see if you’re ready to buy. Also remember to factor in that you’ll need a large emergency fund on top of all of this.

Employment: If your job isn’t secure, or you’ll be changing jobs within the next few months, this is probably not the best time to buy a home. Your income is crucial to being able to afford not only the purchase and closing costs, but also the ongoing monthly expenses of owning a home. If your employment situation is subject to change, it might be better to wait until it has stabilized.

Life events: Getting married, having a baby and retiring are a few big life events that prompt people to buy a home. While you may be waiting for one these to begin your home buying process, if the market is favorable for sellers, or you have your finances in order, you can think about buying a house before the time, instead of waiting.  

The time of year

House winter

Seasonality influences the housing market and the months of the year cause different trends in real estate for various reasons.

Spring

Most houses go on the market in spring, which we can see by the major increase in homes for sale across the country between March and April, and sometimes even across May and June. So, spring is essentially house-hunting season which offers buyers both pros and cons.

While property inventory might be high during the spring months, buyers also need to factor in the stiff competition that they’ll be facing and the fact that sellers tend to price their homes at the top end of the range as a result of the flurry of interest. This can lead to a bidding war where a home would cost you more than you had bargained for.

Summer

Summer is still a busy season for the real estate market, but towards the end of the season, buyers can snap up some good deals as the buying frenzy begins to cool down and sellers contemplate lowering their prices.

In the first part of the summer, the market is full of serious buyers, so make sure that you go into it armed with your mortgage pre-approval or proof of funds letter. Bear in mind, if you’re looking for a home in the summer before August, chances are you’ll need to pay top dollar for it.

Another factor to consider is that this may be a good time to sell your home, so if you’re selling and looking to buy a new home, the flurry of market activity could work in your favor with selling your home for a higher price, while you’re looking for your next one.

Fall

If finding a good deal is the most important criteria for your property purchase, then the fall months may be a good bet for you. There are less buyers in the housing market in fall, and once the summer frenzy has ended, the sellers whose homes are still on the market are looking to get their homes sold quickly. Which means that they often slash prices or are more willing to negotiate.

October is one of the months where buyers can pick up a good deal on homes that have been on the market for a few months but haven’t sold yet. These sellers more than likely want to get their homes sold before the end of the year, and will be more open to negotiating on the purchase price.

Winter

Winter is the time when home prices are the lowest, with December and January being the months where home prices drop, after the earlier highs. If you’re willing to brave the chill, you could pick up a better deal on a home if you buy in winter.

The drawback to winter is that it’s a quieter period for real estate, and there are less homes on the market. It’s also a holiday and vacation season, so between November and December there is often a drop in the number of homes listed. This could make it harder to find the right home, as you’ll simply have less options.   

The housing market

The housing market can fluctuate based on seasonality as discussed above, but factors like interest rates, supply and demand, as well as worldwide events like pandemics, can have a big impact as well.

The real estate market varies from area to area, so it’s important to make sure that you’re well aware of the trends in the specific area where you’d like to buy. For example, Florida’s housing market trends may be very different to a place like Utah, based on the weather and a myriad of factors.

In-demand neighborhoods often have less homes on the market, and the homes that are available are set at higher price points. The supply and demand factors in each area are a driving force behind whether it’s a seller’s market or a buyer’s market.

What is a buyer’s market? This occurs when there is a high inventory of homes available, and because of this, the prices aren’t as high due to the competition. So, buyer’s benefit from having their pick of listings, all of which aren’t over-priced.

A buyer’s market can be a great time to buy a home, but you won’t be the only one thinking that, so you’ll face many other buyers looking at the same homes as you and potentially putting down higher offers. Keep this in mind when you’re buying a home in a buyer’s market.

House front

Mortgage rates

The rise and fall of mortgage rates are factors that real estate agents will often suggest to buyers to use as an indication of when to purchase a home. Of course, low mortgage rates make for a more attractive deal, so that’s not to say that these factors should be discounted.

However, over the last decade, mortgage rates have remained consistently at the lower end and the chances of them rising quickly isn’t as high as you might think. Mortgage rates experience ebbs and flows so you could try to time your home purchase to one of the times when rates are a little lower, but this doesn’t need to be the deciding factor.

Economic factors

Recession: During a recession, the economy slows down because there’s simply less economy activity and this can last about 6 months. Having that said that, house prices are actually lower during a recession as people want to make sure their homes get sold. So, you could pick up a better deal, unless of course your job is at risk then buying a home should not be on your radar until you have your job security back.

Interest rates: Housing prices are heavily influenced by financial factors such as interest rates. For example, during the Covid-19 pandemic, the Federal Reserve lowered interest rates, which led to lower mortgage rates and could’ve been a good time for home buyers to enter the market.

Elections: Political changes like elections can cause a slowdown in the market, as uncertainty rises. Political uncertainty is one of the biggest factors that can lead to a decrease in a currency, along with lower investor confidence. So, election periods are times when there can be a general economic and housing market slowdown. However, mortgage rates aren’t always affected by this

In conclusion

At the end of the day, the best time to buy a home is when you’re ready. Every buyer has a different situation and it’s impossible to give an exact time for when you should hit the market. Once you feel comfortable that you’re ready financially and in terms of life events, you can look at the real estate market in the neighborhood you’d like to buy and make your decision from there.