In general, there are three ways to evaluate the best time to buy a home:
Late summer is the best season to buy a house if you want a shopping experience with enough inventory to find a home you love, while benefiting from sellers lowering prices before the fall. Therefore, the best month to buy a house is August.
Generally speaking, buyers in the fall and winter will have fewer options yet more flexibility in price, and spring and summer buyers will have more options, but less negotiating power.
Since more buyers are shopping in the spring, a home you buy between March and May could cost you more than a similar home bought in November or December. According to a Zillow analysis of 2016 listing and sales data, 26% of buyers paid above list price in April while in November, just 15% of homes sold above asking price. The window between late fall and early winter is the best time for buyers on a budget.
Keep in mind, fewer homes are for sale in the cold winter months and around the busy holiday season, so the selection of for-sale homes will be limited.
On the flipside, if you want more homes to choose from and don’t mind paying a premium, spring and early summer are good times to buy a house, as April has the most new listings.
Most listings hit the market in a short window between the months of April and June. If you’re planning to buy in a market with harsh winter weather, May and June typically have twice as many active listings as December or January. However, in temperate markets this springtime pattern is far less noticeable.
According to the same data set, August has the most price cuts, while inventory levels are still healthy. In 2016, price cuts were most common between July and September.
Additionally, August is the final month in the time span where listings are most abundant nationwide. Peak inventory falls between June and August.
Both national and state or local factors can affect the housing market, and your decision to buy. Nationally, things like interest rates, the job market and the overall health of the U.S. economy can impact the housing market. On a more local level, your decision to buy could be affected by buyer demand, the local job market and the local rental market.
If mortgage interest rates are low, home buying is inherently more affordable, and it makes buying a feasible option for more people. It’s beneficial to shop rates even for small rate improvements. Here’s an example:
The current average 30-year fixed mortgage rate is hovering around 3.8% (as of September 2019). Let’s say you want to buy a $300,000 home with 20% down ($60,000). Your monthly mortgage payment (not including taxes, insurance and other costs) can vary by more than $100 a month, just based on a one-point increase in mortgage rates:
Lower interest rates can also put more expensive homes within reach for some buyers, assuming you’re also able to increase your down payment to avoid paying private mortgage insurance. For example, with a 3.8% interest rate, you could buy a $337,000 home with a 20% down payment ($67,400) for $1,256 per month — that’s $3.00 less than buying a $300,000 home with an interest rate one point higher at 4.8%.
In deciding a good time to buy a home, remember that purchasing when home values are trending upward is always a good idea, as you will start building equity immediately. The idea is to buy low and sell high, of course. While nobody can predict the market, these are some of the factors that might indicate a good time to buy — and a good eventual return on your investment.
Buying before you’re financially ready or buying a home that’s too expensive could leave you at risk of defaulting on your mortgage down the road, or ultimately losing your home to foreclosure.
Being a homeowner is expensive. Zillow research shows that the hidden costs of homeownership average $9,080 per year. That includes things like taxes, insurance and utility payments, but doesn’t include landscaping and cleaning, which can add another $3,021 a year.
Buying a home that hasn’t been maintained or updated can add even more unexpected costs, particularly in the first few years of homeownership or when major systems in the home fail. New construction tends to come with a higher price tag, but there’s less of a risk of unexpected expenses as everything is brand new.
If buying an outdated home makes you nervous, consider buying a recently updated home. Zillow-owned homes are move-in ready, so you shouldn’t have to worry about big-ticket repairs immediately after moving in.
Finally, remember that your housing expenses are only one part of your personal financial picture. Affording a mortgage and its related expenses can be a challenge if you’re also in the midst of paying medical bills, kids’ college tuition, if you’re retired or have an unstable source of income.
Deciding on the right time to buy a home isn’t just about money — you also have to be mentally prepared. Owning a home is a new lifestyle. It takes a higher level of responsibility than renting, as you are the only person responsible for maintenance, repairs and upgrades. This is why some people decide to remain renters. When you rent, these big responsibilities, as well as everyday maintenance, fall to the landlord instead.
If there’s a possibility that you might move to a new city in the next few years, buying may not be a smart decision. Zillow research found that it can be more cost effective to buy if you plan to live in the same home for more than three years. After three or more years of living in a home you own, gains in equity from home appreciation and from paying down your mortgage can often be enough to help recoup the upfront costs of buying.