The housing market is affected by many factors, from the economy to interest rates to local supply and demand. But did you know that the time of year can influence the final sale price of a home?
Believe it or not, home prices vary by the season. So when is the best time of year to buy a house? Here’s how the housing market changes during the course of the year.
Spring Home-Buying Season
The spring and summer months tend to be a seller’s market. Spring, especially, is a hot selling season due to the pent-up demand from the winter months. Additionally, the warmer weather often encourages home buyers to start their house hunt, and the budding flowers and trees add curb appeal to homes entering the market.
As a homebuyer, you’ll need to have a strong offer at the ready; that means more than just having enough money to cover the purchase price and closing costs. Many sellers won’t even consider an offer unless you have a pre-approval letter from a trustworthy lender. Even then, you may find yourself in a bidding war due to higher demand.
On the other hand, spring brings an increase in available homes, which can give buyers more choices. According to the National Association of Realtors, the number of homes jumped from 850,000 to 930,000 between February and March of 2021, reaching 1.15 million by May.
Summer Home-Buying Season
In many ways, the summer months are a continuation of the spring. Buyers can expect a higher number of homes for sale, though they’ll also face strong competition with others looking to buy a home between June and August.
But there’s an upside to buying a home during the summer. Many of the homes on the market are left over from spring, and sellers may be eager to close on their homes before September rolls around and the school year begins. Therefore, if you can wait until August, you may be able to find a motivated seller who is willing to offer you a reduced sales price.
These summer trends are also climate-dependent. The sweltering heat of places like Florida or Texas can discourage buyers from shopping in earnest, so you may discover that your local market is more or less affected by summer, depending on your distance from the equator.
Fall Home-Buying Season
Fall is very much a buyer’s market and can potentially be your best time to shop. Once summer ends, sellers can be motivated to sell their homes, especially if they want to use them as a tax write-offs before the end of the year.
Doesn’t that mean you’ll face less selection? Yes, it’s possible, depending on your region. However, the National Association of Realtors (NAR) reports that in 2021, there were more homes available between September and November (1.2 million, on average) than between March and May (1.1 million). Consequently, fall might actually be your prime buying season.
When is the best time to buy a home during the fall? Data from the NAR shows that in 2021, housing prices dropped from $361,500 in August to $355,100 in September. This makes September your optimal choice, though prices only increase by a few hundred dollars during October and November.
Winter Home-Buying Season
Winter can be an unusual time to buy a home, especially since the calendar year changes in January.
On the one hand, many sellers suspend their listings between Thanksgiving and the New Year, believing that buyers are too scarce. But the sellers who continue to list may be particularly motivated to sell their homes prior to January, which may give you an edge.
However, there are some challenges to buying a house in winter. If you live in a cold climate, snowstorms can interfere with your ability to visit various properties and can also make it difficult for home inspectors to examine roofs and other structures.
Furthermore, once January hits, sellers may no longer be quite as motivated to sell their homes and may prefer to wait a few months until the seller’s market in the spring.
Buying a home early in the winter can help you save, but you may face challenges the longer you wait.
Tips for When to Buy a House
Real estate markets fluctuate by season, but there are other personal and economic factors to consider when buying a home. Here are some tips that can guide you through the process.
Are You Ready to Buy a House?
When is the best time to buy a house? When you’re ready.
To that end, make sure you consider such factors as:
- Having enough savings for a down payment and closing costs
- Improving your credit score to secure favorable interest rates
- Plan to keep the same job through the buying process
- Paying off any outstanding debt
If your credit score is low or you carry a lot of household debt, it may be wise to work on these issues before starting your home search. A low credit score or high debt-to-income ratio can jeopardize your chances at favorable mortgage terms and leave you stuck with higher mortgage rates.
What Are the Current Market Conditions?
Before you start shopping, take a look at the following key metrics:
- Average home price in your area
- Current mortgage rates
- The supply of homes in your area
For example, when the U.S. Federal Reserve raised interest rates in 2022, mortgage rates went up nationwide. With the economy beginning to stabilize, home buyers are now able to re-enter the market and obtain homes with affordable rates and terms.
What Is the Local Inventory?
Research the number and type of available homes in your area or the area you want to move to. A large inventory of homes will give you more options and will also prevent you from having to compete with other buyers.
As you’ve seen, housing supply can be affected by the calendar year. Don’t get discouraged if you can’t find your dream home in February. By May or June, you may find a home that fits your needs. If you hold out until fall, you could even find the deal of a lifetime.
How to Get a Mortgage Pre-Approval
Getting pre-approved for a mortgage will give you a clear picture of your purchasing budget and give your offer more weight in sellers’ eyes. During the pre-approval process, you’ll submit some basic financial information and submit to a credit check.
Once approved, you’ll receive a pre-approval letter that outlines the basics of your prospective loan. Just be aware that no loan is official until you receive final approval from your lender.
The “Perfect” Time to Buy a House
Ultimately, there’s no single best time to buy a house. But if you understand your needs and the state of the market, you can time your purchase to your advantage. For more assistance with the pre-approval process, contact the team at CrossCountry Mortgage today.