To get the best price and mortgage rates, home buyers should evaluate the state of the housing market and their personal finances. The key factors that play a role in the best time to buy a house are:
1. Housing Market Conditions
In 2023, the average cost of a home officially rose to over $417,700[1]. If you’re looking for a home, you’ll need to understand how the housing market is influenced by three overlapping factors. Understanding these factors can help you determine the best time to buy a home.
Housing Availability
Like the cost of any consumer product, housing prices are governed by the basic laws of supply and demand. The more homes that are available, the lower the price will be for each one.
With more homes available, there’s also a greater likelihood that a house will sit on the market for longer than a seller might prefer. This scenario may prompt motivated sellers to drop their prices to compete in the real estate market.
Conversely, when housing availability is low, the price of each house will be higher. Buyers will feel this crunch when it’s time to make an offer and may get involved in a bidding war with other buyers who are competing for the limited housing options in their area.
Housing Prices
Housing prices are influenced by supply, though this isn’t the only factor that affects the price of each home. For instance, larger, newer homes tend to be pricier than smaller, older homes.
Similarly, if the seller has recently completed renovations, the asking price will likely be higher. Even a fresh coat of paint or new shrubbery can boost a home’s curb appeal and increase its selling price by 5% to 11%[2].
To save money, some home buyers opt to purchase a fixer-upper and complete their own renovations. This can also be a path toward real estate investment, and today’s renovations can become tomorrow’s profits.
Mortgage Rates
In 2022, the U.S. Federal Reserve increased interest rates in an effort to combat inflation. When it comes to mortgages, interest rates are determined by a variety of external factors, including:
- The rate of inflation
- The rate of job growth
- The state of the U.S. economy as a whole
These external factors represent market conditions that you can’t change. But remember that your credit score and the type of loan you receive will also influence your final mortgage rate.
Timing the Market
Based on the housing market, when is a good time to buy a house? While the market isn’t always predictable, home buyers will generally have a better chance of securing a deal by:
- Waiting until home availability is at its highest
- Seeking a smaller or older home (or a fixer-upper)
- Applying for financing when the economy is strong
Not every home buyer can delay a purchase until just the right time. But those who strategically start their search during favorable market conditions will be better able to secure a home that fits their needs and budget.
2. Personal Considerations
How ready are you to buy a home? Having your personal finances in order can influence the price you’ll pay for your home. But before you start shopping, you’ll also need to consider your housing needs and long-term plans.
Financial History
Your personal financial history will be critical for determining your purchase budget, loan eligibility, and interest rate. Lenders will look at areas such as:
- Your debt-to-income ratio
- Your personal credit score
- Your savings (which can be used for a down payment)
👉 Discover the credit score requirements for each type of home loan when purchasing a house.
Some lenders will even look at your work history to determine whether you have the financial stability necessary for repaying the loan.
If you’re thinking of buying a home, your first question might not be, “When is a good time to buy a house?”. But instead, you should ask “Do I have the financial means to afford a home?”
In some cases, it may be better to pay down debts or build your savings, which can improve your purchase budget or mortgage rate.
Housing Needs
You’ll also need to think through the must-haves your prospective home needs. These might include things like:
- Do I need a garage?
- Do I need a lot of yard space?
- How many bedrooms do I need?
- How many square feet do I need?
- How far am I willing to commute?
- What kind of neighborhood do I want to live in?
If you plan on starting or expanding your family, you’ll also want to factor in additional space for your children as well as your proximity to schools, parks, and other amenities.
The answers to these questions can have a direct bearing on the price you pay for your home. But more importantly, they can help you refine your search and expectations to proceed more strategically.
Long-Term Goals
When is a good time to buy a house? When your long-term goals are clear.
This is more than just understanding the decision-making factors listed above. It also relates to your long-term plans, which can influence whether now is the best time to buy a home.
For example, if you plan on putting down roots in the community, then now could be a great time to buy a home.
But if you plan on moving in the near future, it might make more sense to keep renting. Or, if you already own a home, you might renovate your existing house—which can increase its selling price—or focus on saving for a larger down payment once you relocate.
In most cases, home buyers should only commit to buying a property if they plan on remaining in the area long enough for the equity in their home to exceed the costs associated with buying and selling a home. Depending on your loan type, this can take several years.
3. Time of Year
Believe it or not, the time of the year can influence your home-buying experience.
Spring and Summer
In addition to bringing warmer weather, spring and summer tend to heat up the real estate market as well. Spring, in particular, brings out buyers in droves, often resulting in bidding wars in popular markets.
Buyers can land a better deal if they’re willing to wait until the end of the summer when motivated sellers are more apt to reduce their asking prices before fall arrives.
Fall and Winter
Fall and winter generally see a drop in housing demand. During fall months, homes may be left over from the summertime housing market, which can prompt sellers to drop their prices. Sellers who list their homes during the winter may be especially motivated, which can be great news for buyers looking for the lowest prices available.
All of this means that if you’re looking for a good time to buy a home, consider waiting until the weather gets colder when prices drop and there are fewer buyers competing for a home.
4. Local Factors
It’s easy to read articles about the state of the American housing market. But many times, your local real estate market will look markedly different from national averages. Real estate is an intensely local business.
For instance, the availability of homes in your area may cause home values to differ from the national market.
If your community has experienced a recent construction boom, you can generally expect to find a wider array of available homes, which can lower costs considerably. An economic downturn might increase the number of foreclosed homes, which can generally be purchased for less money.
Similarly, the state of your local economy can drive real estate prices up or down, and it may even prompt sellers to adjust asking prices accordingly.
The larger point is that your decision to buy a house should depend not just on broad economic trends but on local factors as well. It may be a good time for a person in New York to buy a home, but a home buyer in California or Texas may need to wait until their local market improves.
It’s always important to research your local market before starting your home-buying journey.
The “Best” Time to Buy a House
When is the best time to buy a house? The best time is when it’s right for you and your family.
It’s ideal to try to wait for the ideal housing market, but not every home buyer has that luxury. Staying flexible can help you navigate the confusing — and sometimes disappointing — real estate market and ensure that you find a home that fits your needs and your budget.
If you find yourself buying a home in an unfavorable market, you don’t need to feel as though the deck is stacked against you. Many mortgage lenders will work with you to get the best rates and terms available, and if all else fails, you might consider refinancing when the market improves.
