When Is the Best Time to Buy a House?

Homeownership has always been part of the American dream. In fact, at the end of 2024, 65.7% of Americans owned homes. However, owning a home means buying a home, which, for many Americans, is the largest purchase they’ll ever make. With so much money on the line, you probably want to know the answer to a fundamental question: When is a good time to buy a house?

The answer is complicated, so it’s normal to be confused or even a little overwhelmed as you wonder, “Is now a good time to buy a house?” or even “Should I buy a house now?”

In this article, we’ll explore the question of when to buy a house from various angles. First, and most importantly, let’s consider whether you are in a good position to start house shopping.

Are You Ready to Buy a Home?

It’s easy to get hung up on details like interest rates, market conditions, and even the time of year. But before you start tangling with those factors, it’s important to step back and ensure the time is right for you to buy a home. So, let’s take a look at some important questions.

Can You Afford a Down Payment?

Around three-quarters of recent home buyers financed their home purchase with a mortgage. While that’s a great option, it requires a down payment, which can seem daunting.

We have some good news, though. You don’t need to save 20% down payment on your home. You can put down far less or, in some cases, nothing. In fact, according to research from the National Association of Realtors, the typical down payment for a first-time homebuyer is just 8%.

However, a down payment of less than 20% does have some drawbacks. These include mortgage insurance requirements and higher monthly payments.

How’s Your Credit?

If you plan on taking out a mortgage, you’ll need to ensure you can get approved for a loan. You’ll want the best loan terms, and your credit score is a significant factor in that equation.

If your score is too low, mortgage lenders may consider you too risky. Even if they agree to lend to you, you’ll pay a higher interest rate.

So, what credit score are lenders looking for? That varies from lender to lender and depends on a few other factors. Federal Housing Administration (FHA) loans require a minimum credit score of 500. You’ll need a score of at least 620 to get a conventional loan. According to BankRate.com, you’ll want your credit score above 760 for the best terms.

If your credit score is below 600, it may be a good idea to hold off on your house search and instead refocus on boosting your score.

Please read our blog on how to increase your credit score to buy a home.

Other Personal Finance Factors

Mortgage lenders look at most factors when determining whether to approve you for a loan and what interest rate to offer. These include things like:

• Employment history and income
• Debt-to-income ratio (DTI)
• Savings, investments, and other assets
• Credit history

An experienced real estate agent or mortgage broker can break down these factors and offer advice on how to improve your finances to get the best mortgage possible.

Interest Rates and Market Conditions

When you ask yourself, “Is now a good time to buy a house?” consider the current interest rate and the market conditions. Interest rates impact your monthly mortgage payment and the total amount you pay over the life of the mortgage. For example, if you take out a 30-year mortgage of $400,000 at 6%, you might pay $2,398.20 a month on your mortgage and $864,352.76 over the life of the loan. If you could get that same loan at a 5% interest rate, your monthly payments could be $2,147.29, and you’d pay a total of $773,023.14. That’s over $250 a month less in mortgage payments and more than $90,000 in savings over the 30-year loan. You can see why it pays to shop around for the best interest rate and loan terms.

Market conditions also affect your housing search. Are there many homes for sale and fewer people wanting to buy? If so, you’ll have more choices and may be able to negotiate a better deal on a sale. If there are fewer homes for sale and fewer buyers, you may need to pay over the asking price or settle for a house that doesn’t check all your boxes.

So, how much weight should you give to the interest rate and market conditions when shopping for a home? The answer depends. If you are happy in your current home and don’t need to move immediately, waiting may make sense if interest rates are high or the available housing stock is scarce. At the same time, it can be challenging to time the market. Who says interest rates will go down anytime soon or the housing market won’t be more restricted?

If you are house hunting in a high-interest environment, you may consider buying with the intention of refinancing your home when interest rates are lower. Additionally, if high interest rates or bad market conditions are scaring off other would-be buyers, you might be able to get a good deal.

Best Time of Year to Buy a House

So, when is a good time to buy a house – specifically, is it in a month or season? If you want as many housing choices as possible, spring is almost always your best bet. As the weather warms and the school year ends, many people start thinking about buying and selling.

The benefit of house shopping in the spring (and the summer to a lesser extent) is that you’ll have much more choice. However, there are more buyers at this time, increasing the competition. You might be more likely to get into bidding wars or pay more for your home.

An analysis of more than 51 million home and condo sales from 2011 to 2022 found that sellers received the most on homes sold in May, June, and April (in that order).

On the other hand, fall and winter are often the slowest months for real estate. Houses typically don’t show as well in the colder months when lawns and gardens go into hibernation. Many people also aren’t keen on dealing with a house sale during the busy holiday season or when the weather may be challenging.

As a buyer, you may have fewer choices of homes to consider, but it could be that someone selling in winter and fall is highly motivated and may be willing to make a deal. The same study we referenced above found that seller premiums were at their lowest between October and December, with November being the worst month. Good deals may be hiding out for those buying a home in the winter if you’re willing to be patient and flexible.

Is It a Good Time to Buy a House?

Only you can answer this question for yourself. First, you’ll need to look at your financial situation. Have you saved up an adequate down payment? Is your credit score strong? Will you get good terms on your loan?

Next, you’ll want to look at current interest rates and market conditions. Remember that trying to “time the market” can be a double-edged sword. If conditions get better, competition may grow steeper as well.

Finally, the time of year often impacts housing supply and buyer competition. Spring and summer are the hottest seasons for real estate, but while more houses are often on the market, you may face stiffer competition from your fellow buyers. You likely won’t have as many choices during winter, but sellers tend to be motivated.

You’ll need to consider all these factors when deciding when to buy a house. A knowledgeable real estate agent can be a huge asset in helping you figure out the right timing for you. (Learn how to find a real estate agent.)

While searching for a new house, don’t overlook the value of a home warranty. A home warranty can help protect your budget when home systems and appliances break after you move into the home. This is especially true if you have depleted your savings on the down payment.

You can often negotiate a home warranty with a seller during your closing. Why buy a home warranty? There are many reasons, including peace of mind and budget protection. A First American home warranty could help you save big and ensure your new home stays up and running after your move-in date.

FAQs About When to Buy a House

What credit score do you need to buy a house?

Your credit score is important in getting approved for a loan and can affect your loan terms. Every mortgage lender assesses your credit score differently. Generally, you’ll need a credit score of at least 620 to be approved for a loan, though certain lenders give loans to applicants with a credit score as low as 500. You typically need a credit score of 760 or higher to get the best mortgage terms.

What is the best month to buy a house?

There is no “best” month to buy a house, though the spring season is generally the busiest. That said, there also tend to be more buyers on the market during the spring and summer seasons, which may mean higher prices and more competition. The busiest months for real estate are April, May, and June.

What is the worst month to buy a house?

Winter usually sees the lowest inventory of houses on the market, but low-season sellers can be motivated to deal, and you may face less competition from fellow buyers. Many people don’t want to sell or buy during the holiday season. The slowest months for real estate tend to be October through December.

The contents of this article are provided for general guidance only. First American Home Warranty does not assume any responsibility for losses or damages as a result of using this information.