When is the best time to buy a house?

By Jeff Keleher on 10/29/2021

When is the best time to buy a house?

Just about everyone dreams of buying a house one day, but how do you know when the time is right to pull the trigger on a new home? The best time to buy a house often comes down to a wide variety of factors ranging from the mortgage industry and the economy to your local real estate market and your personal finances.

So, when is it a good time to buy a house? That depends. But just because there’s so much variance to the question doesn’t mean we can’t find a suitable answer. You simply need to be aware of the different forces that impact your homebuying prospects so you can time your purchase to put yourself in the best financial position possible as a first-time homebuyer.

Determining the best time to buy a house

The right time to buy can depend on seasonality, mortgage rates and treasury bond movement, among a host of other factors. If you’re thinking about going on the hunt for a new home, review these four factors first to see if purchase conditions are favorable:

4 factors to decide the best time to buy a house

Mortgage industry trends
Real estate seasons
Local real estate market
Personal situation

1. Mortgage industry trends

It’s tempting to look solely at the asking price when asking yourself, “how much will this house cost me?” But that number alone doesn’t tell the full story. The month-to-month expenses of homeownership can be roughly summed up as PITI: principal, interest, taxes and insurance. There could be other costs you need to budget for — additional hazard insurance, for instance, or private mortgage insurance if your down payment is too low. But PITI represents the bulk of your housing costs.

Principal and interest, in particular, are the most expensive items listed on your mortgage statement. The principal is simply your loan amount, so it’s entirely based on your home’s sale price. But interest rates fluctuate from year to year, month to month and even day to day. Slight deviations in mortgage rates can have a profound effect on your housing costs and the total amount you pay on your home loan.

How interest rates are set is pretty complicated in its own right, factoring in several considerations like the treasury bond market, recent Federal Reserve decisions and real estate market trends. When interest rates are low, it’s usually a good time to consider buying a house, so be sure to keep an eye on current mortgage rates. And if rates do go up, know that you could always refinance at some point later on down the line.

2. Real estate seasons

Like retail, landscaping and tax services, the real estate industry is inherently seasonal. Spend a few years watching the housing market and you might notice that home prices tend to go up in the spring and summer before dropping back down in the fall and winter. You’ve probably noticed similar seasonal fluctuations as a renter. There are pros and cons to buying in any season, with the two biggest considerations being price and inventory.

You might see better deals on homes in the winter months because there’s less demand, which means less competition. On the other hand, though, you’ll probably have fewer options to choose from because inventory is higher in the springtime through the summer.

Homebuying conditions are flipped in spring and summer: much more inventory to comb through, but also a lot more competition to fend off. Which time of year is better as a prospective homebuyer? If you’re looking for the lowest price possible, you might want to wait for the weather to cool down. Want more listings to look at? You’ll find more houses on the market once the snow melts and the ice thaws.

Broadly speaking, much of this seasonality is driven by the school year, especially when you’re talking about single-family houses. People don’t want to disrupt their kids’ schooling unless it’s absolutely necessary — e.g., parents need to relocate for a job. That’s why spring and summer are so popular among house hunters: You can find a house, make an offer, close on the property and move into your new home all before the next school year rolls around.

Winter is also a low point for house hunting because a lot of people are incredibly busy around the holidays. Most folks don’t want to add the stress of buying a home to an already stressful time of year, let alone sort out the logistics of moving when the temps are low and the streets and sidewalks could be lined with ice and snow.

Let’s be perfectly clear, there is no “perfect” season to buy a house. Every time of year has pros and cons to consider:

Housing market seasons: Pros & cons

Spring: Inventory is at its highest, giving you tons of options. But you’ll also need to contend with the stiffest competition.
Summer: Inventory will have dropped off some from the springtime highs, but that could also mean that there are fewer house hunters to go up against.
Fall: Both inventory and demand are low, but haven’t quite hit rock bottom yet. This could be a good time to snag a deal on a house — assuming you can find one that meets your needs.
Winter: Inventory and demand have reached their nadir. The bad news: There are very few homes to choose from. But, you can probably afford to lowball your offer or request seller concessions because homeowners are as motivated as they’ll ever be to sell.

With all of that in mind, what is the best month to buy a house? Some may argue that you should split the difference between the summer’s high inventory and the fall’s low prices by focusing on the end of summer and beginning of fall. The idea being that the market could still be flush with inventory (although not quite as high as the springtime) while demand has started to drop off, leading to fewer bidding wars.

Now, these seasonal trends aren’t always set in stone. Case in point: The COVID-19 pandemic derailed housing supply chains (think: lumber and other essential materials), so 2021 never saw much of a seasonal bump in inventory. To be sure housing inventory did go up in the spring and summer, but not by much compared with previous years.

Is it a good time to buy a house?

3. Local housing market

Mortgage rates and real estate seasonality are macro factors, in that they impact the entire nation. But you can take a more granular look at the forces that help shape the best time of year to buy a house. Case in point: your local housing market. Housing prices in your area could go up or down regardless of how the real estate market is trending nationwide.

The same principle holds true for inventory as well. The Wall Street Journal noted that while hot real estate markets like Seattle, New York and Boston saw an uptick in available inventory this past spring, those increases were often relegated to a few select neighborhoods. Nearby vacation destinations like Cape Cod and the Jersey Shore actually saw inventory decrease during that time.

You also need to consider how different property types are performing in your area. Is there more demand for single-family homes compared with condos? Or vice versa? Knowing where your local real estate market is headed can help you time your purchase to capitalize on a good deal or buy before housing prices really take off.

The best state to buy a house in really depends on what you’re looking for: better value or a stronger investment? You can get more bang for your buck in places where demand is rock bottom. But your home may not appreciate in value much, if at all. Buying in a red-hot market like Washington State or Utah could be a better long-term investment, but you’ll pay a lot more up front.

Of course there are other, more personal, factors to weigh. Do you want to be close to your extended family? Can you work remotely or does your job require you to live within a particular metro area? These are considerations that can color your view of the best place to make a home purchase.

4. Personal situation

The final piece of the puzzle? You. No matter what the economic conditions look like, your financial situation and place in life are the ultimate trump cards when it comes to figuring out when it makes sense to buy a home. You need to look at your personal circumstances from a few different perspectives to fully appreciate the impact they might have on your homebuying prospects:

Life events: Are you getting married or planning to start a family? Then you may need more space in the very near future. On the other hand, if you have a bit of wanderlust and are still looking for an area that feels like home, it may not make the most sense to put down roots.
Career path: If your career is on an upward trajectory, you could be in a strong financial position to consider buying a home of your own. Your income level, job security and upward mobility are all important points to consider when projecting how you’ll be able to manage your financial obligations as a homeowner. A change in job or a relocation could force your hand, though.
Your family: Are your kids starting a new school year? If so, you may want to hold off on buying a home until they’ve gotten settled. You also need to consider the roots your family has laid in your community. Uplifting your family and moving to a new town and school district could cause unnecessary stress.
Homebuying budget: When you’re out house hunting, your options will be limited by your budget. Obviously, the more money you have coming in each month, the more you can afford to spend on a new house. That includes both the down payment (usually a percentage of the purchase price) and your ongoing mortgage payments.
Monthly expenses: Your mortgage is only one of many expenses homeowners need to pay each month. Everyone has bills to pay, but some may face more than others. If you’re already struggling to keep up with student loans, car loans and medical bills, adding a monthly mortgage payment on top of all of that could be tricky to manage.
Interest rates: Mortgage lenders look at your credit score, debt-to-income (DTI) ratio and monthly income when setting interest rates. Stronger finances means lower interest rates, which will make your mortgage more affordable now and in the future.

Is it a good time to buy a house?

At any given time, you could be in a great position to buy a house or you may want to hold off until more favorable conditions come around. To know for sure, ask yourself these questions:

Are home prices in my area higher or lower than normal?
Are mortgage rates trending upward or downward?
Can I comfortably afford my mortgage payments over the entire life of my home loan?
Is there enough inventory to find the perfect house for me?
Will consumer demand go up or down in the coming months?
If I wait, will I be able to afford to spend more on a home later down the line?
If I wait, will I risk being priced out of the housing market?
Will buying a home now disrupt my family?

Even in times when demand is up, prices are sky-high and inventory is low, you may still want to take the plunge on homeownership. It’s been pretty well established that homeownership is one of the most sound financial decisions you can make, given the way real estate markets are trending. As an investment vehicle, real estate is also remarkably resilient against inflation, especially if you use a fixed rate mortgage.

In conclusion

Timing your purchase is extremely important if you want to find the right home at the right price. And the best time to buy a house depends on your local housing market, your personal finances, seasonal shifts in real estate and the mortgage industry itself.

You also need to consider what you care about most: getting a good deal or landing the perfect house that has everything you're looking for in a home. Those two aren't mutually exclusive, of course, but you may have to make compromises in your budget or list of must-have amenities.

Navigating the housing market at any time can be tricky given all of these considerations. Working with a mortgage professional who can step back and show you the full picture — from your finances and loan eligibility to the home price trends and local housing market conditions — can be really helpful. Better than just about anyone else, they have the expertise and insight to let you know if it’s a good time for you to invest in a home of your own.