Is It A Good Time to Buy A House?
Is this a good time to buy a house? Market conditions are always in flux, so it’s more important to consider whether or not you feel personally and financially ready for home ownership. If you do, this is a relatively good time to buy a house — but only because home prices and interest rates are likely to go up if you wait until 2024.
Is now a good time to buy a house?
The current real estate market is a seller’s market, which means that sellers have an advantage. Due to a shortage of homes on the market, most sellers get to choose from multiple offers while buyers are left scrambling to come up with the best bid. In fact, home sales are down 15% year-over-year as of August 2023 — reflecting that many potential buyers are taking themselves out of the game right now.
But, as with most large life decisions, there’s no “perfect time” to buy a house. And as long as you’re financially ready, there’s no reason you absolutely shouldn’t buy a home now. The best thing to do is educate yourself on the current housing market and go in prepared.
5 challenges of the housing market today
- High interest rates. Mortgage rates hit 7.57% in October, the highest they’ve been in over 20 years.
- High home prices. The median home price is $416,100 as of the third quarter of 2023, — 23% higher than it was just three years ago.
- Low housing stock. There’s a shortage of available homes for sale, which lends the current seller’s market a frenzied, competitive vibe. Homes are selling very quickly — most in 20 to 30 days.
- High rates of loan denial. The number of people being denied a loan because their income falls short is higher than it’s been in at least five years.
- High costs and fees. The amount home buyers must pay in closing costs is rising, and more borrowers are electing to pay for mortgage discount points. Doing so allows them to lower their interest rates, but that benefit doesn’t come cheap: In 2022, the median borrower paid $2,370 in discount points, on top of the usual closing costs.
Keep in mind: despite the many challenges in the real estate market today, in some cases buying is still a better financial choice than renting. You can use our rent versus buy calculator to help you run the numbers.
Should I buy a house now or wait until 2024?
If you’re ready to buy but are wondering whether it makes sense to hold off, you’re likely better off buying now. All of the challenges we mentioned above are only likely to get worse in the coming year.
Here’s what market watchers are expecting in 2024:
- Rising interest rates. Experts predict that mortgage rates will stay high in 2024 and could continue to rise. They also expect that the Federal Reserve won’t begin cutting interest rates until mid-to-late 2024.
- Lower housing stock. High rates also exacerbate the issue of low supply, since many homeowners who would otherwise sell don’t want to when rates are high. Most are sitting on mortgages with interest rates below 4%, so trading that in for a new mortgage with a 7% or higher rate just isn’t appealing.
- Higher home prices. The cost to buy a home is expected to rise by at least 0.8% between now and next fall, with some experts predicting up to a 2.6% increase in 2024.
- Lower affordability. Higher interest rates generally result in bigger monthly payments, so you may not be able to afford as much house as before.
For more predictions from our market expert, read our full mortgage interest rates forecast.
When is the best time to buy a house?
Assuming you’re financially ready, the best time to buy a house is late fall or early winter. More specifically, the absolute best days of the year to buy a house are Nov. 28, Jan. 9 and Dec. 5, according to a recent study by the real estate data company ATTOM. On those days you stand to pay the lowest premiums for a home, typically only 1.1% to 1.5% above market value. The study looked at 39 million single-family home and condo sales over the last nine years.
Here are all twelve months of the year ranked by how ideal of a time they are to buy a house.
What’s the best time of year to buy a house?
When is the worst time to buy a house?
Late spring and early summer are the worst times to buy a house, according to the ATTOM data. In June, April and May buyers paid between 10.5% and 7.8% more than market value.
What is the best season to buy a house?
Here are some of the more qualitative factors that come into play as the real estate market cycles through its seasonal rhythms.
Buying a house in the fall
After the summer rush, the housing market generally has fewer buyers — so you could have less competition. Many homeowners selling during the fall are also motivated, wanting to make a deal quickly, as the school year and holidays are coming up.
Buying a house in the winter
Homeowners selling during the winter are typically strongly motivated to sell and may be more willing to negotiate house prices. The entire real estate market is typically leaner during the winter months, so you may find that real estate agents, inspectors and lenders have lower prices and are able to accomplish tasks like processing your paperwork more quickly.
The downsides are that there are usually fewer people selling — and you may have to brave bad weather to do home tours. Home inspectors may also have a harder time checking outside features like the roof if it’s covered in snow and ice.
Buying a house in the spring
As a buyer during this time, you’ll likely find that the amount of homes going on the market increases. You don’t want to hold out too long for your perfect home to appear, though, as more homebuyers are also entering the market in the spring. Be ready with a mortgage preapproval so sellers know you’re serious about your offer.
Buying a house in the summer
Summer is when the housing market roars. During this time, prices are likely to be higher for everything from the home itself to inspectors and other providers, along with the closing costs you’ll pay real estate agents. The closing process can also take longer as more homebuyers jockey to get the keys to their dream homes.
How do you know when you’re ready to buy a house?
Seasonality aside, here are some important financial and personal factors to consider:
→ Have you saved a large enough down payment?
Depending on your loan program, it’s possible to put down as little as 0% to 3.5%, but you may want to save more. If you can scrape together a 20% down payment, you could save hundreds or thousands of dollars a year by avoiding costly mortgage insurance premiums.
→ How are your finances?
Are you able to qualify for a reasonable interest rate on a mortgage loan with your current debt load and credit score? If not, it may make sense to spend time repairing your credit or paying off debts before buying a house.
→ Could you benefit from renting instead of owning?
Home ownership can be a route to building wealth over the long haul, but that doesn’t mean it’s right for everyone. Read our guide to how to choose between renting and buying before you assume that home ownership is the best financial move you can make.
If you have questions about your situation, don’t hesitate to reach out for help. You can talk to a free or low-cost housing counselor approved by the U.S. Department of Housing and Urban Development (HUD).