After the crash in 2008, the US housing market has rebounded in a big way. In fact, if you had bought a property at the lowest point of the recession and still held onto it today, your asset would have appreciated by roughly 25 percent.
It’s expected that the housing market will continue to climb in the coming years due to strong fundamentals. But should you buy now or wait a few months to make your home purchase?
To help you decide, we compiled publicly available national housing data from sources such as the Federal Reserve, Census Bureau, and Zillow. We then used the data to determine the best and worst time to get the best deal on a house. We also discuss other factors that buyers may want to consider when timing their purchase, such as the number of homes on the market.
Best & Worst Months to Buy a Home
For most people that we talked to, including in-house real estate experts, price was the main determinant for best time to buy a house. Buyers looking to snag a great deal can refer to this table to see which month is the best time to buy a home.
Price at Closing
Market Before Closing
Best Month to Buy a Home: January
The start of the year not only comes with fresh resolutions, but it also brings great deals for home buyers. Our analysis reveals that January is the best month to buy a home for price-sensitive shoppers.
In January, the median sales price of homes is at the lowest point. In addition, houses that close during the first month of the year have been on the market for over three months on average. In general, the longer a home stays on the market, the lower the price is at closing. Buyers have more room to negotiate price when a home has been on the market for a long time and tend to get better deals.
Although the percentage of homes selling above listing price is not the lowest in January, it is not the highest either. Since you have median sales price and days on market working in your favor, January is overall the best month to buy a home.
Worst Month to Buy a Home: June
The transition between spring and summer is the worst time to buy a home. June comes at the bottom of our ranking. Houses closing in June sell the fastest compared to other months, so buyers don’t have a lot of room to negotiate price. This might explain why median sales price peaks in June, and the probability of houses selling above listing price is second only to March, April, and May.
The short time on market, high median sales price, and higher percentage of homes selling above list price make June the worst time to buy a home. Overall, price-sensitive shoppers should sit this month out.
Factors Other Than Price For Buyers To Consider
While many people consider price as their top priority when shopping for a property, some buyers may be willing to spend more money to get their dream home. For those buyers, it’s available inventory of homes that matters more.
For those buyers, the set of rankings below may make more sense. Spring months usually bring the highest crop of new homes to the market. A shopper with numerous options has a better chance of finding his dream home in May when new listings are at their highest point, and total home inventory of 2.16 million comes second only to July and September. Overall, there’s no shortage of options during this month.
On the other hand, selections are scarce by the end of the year. December is the time when most homes have already been sold. Total inventory drops to its lowest at 1.78 million, and new listings is also at the lowest point of the year. You might struggle to find your dream home if you shop in December.
1. Median Sales Price
For this factor, we tracked the median sales price of homes for each month from 2010 – 2017. We relied on the data provided by the Census Bureau. Months with low average median sales price received higher rankings.
2. Median Days on Market
Months during which homes take longer to sell received higher rankings because buyers have more room to negotiate and get a better deal at those times of the year. For this factor, we looked at the median days on market of listed homes for each month from 2012 – 2017. We sourced data from Realtor.com.
3. % Above Listing Price
Months where a larger percentage of homes sold above listing price received lower rankings. We collected data provided by Zillow, the leading real estate and rental marketplace. Zillow relied on listing and price data from 2016 and revealed the percentages of homes selling above the original listing price.
4. New Listings
New listings is the number of new homes that became available on the market each month. Here, we relied on data provided by Realtor.com, the official website of the National Association of Realtors. The site offers listings and vital real estate related data from more than 40 million users each month. For this metric, we computed for the average of each month’s new listing count from 2012 – 2017.
5. Total Home Inventory
Total inventory is the number of new listings for the month plus the number of homes already listed for sale and on the market. We gathered data provided by the Federal Reserve and Yahoo! Charts. We tracked each month’s home inventory from 2012 – 2017 and calculated for each month’s average to get the rankings for this metric.
How Our Findings Compare to Other Studies
Our rankings are close to the findings of other major studies on the best time to buy a house.
Zillow agrees with our analysis. The real estate and rental website examined listing and price data from 2016. They discovered that spring offers the widest selection of homes, but it is also the most competitive season. Properties sell faster and for a higher cost than any time of the year. They suggest that buyers should stay patient and consider making an offer towards the end of the summer because that’s when buyers will have both options and bargains.
Their conclusion supports our rankings. While we believe that winter is the best time to buy at a discount and spring is the best time to buy for options, our analysis also revealed that July is the best month to shop for both options and bargains. If price is the only consideration, July comes somewhere in the middle of the pack, but in terms of selections, July ranks second. So if you’re looking for a compromise, perhaps July is the best month for you to go home shopping.
Realtor.com, the official website of the National Association of Realtors (NAR) found that fall is the best time to purchase a home and a great season to spot the perfect property. They offer several points in support of their claim, but we found three that are relevant to our study:
- Lower home prices – Realtor.com relied on the research conducted by RealtyTrac to illustrate that October is the best time to snag a deal.
- Less competition – According to Realtor.com, fall is a good time to shop for a home as most summer buyers would already be out of the picture. However, the tradeoff here is that there may not be as many properties to choose from.
- Worn-out home sellers – Realtor.com writes that sellers who still have their homes listed in the fall are most likely itching to sell. The longer the house stays on the market, the more room you have to negotiate.
Our finding was different from Realtor.com because we didn’t put that much stock into the number of properties on the market. We determined the best month to buy a house (January) and the worst month (June) based on price and days on market.
Bottom Line: Best Time to Buy a Home
Our rankings reveal that the best time to buy a home is towards the end of the summer through early fall. These are the months when plenty of options are available, and you have better chances of striking a good deal. On the other hand, June is the worst time to shop for a home. Although listings are plentiful compared to spring months, prices are off the charts, and competition is significantly higher.
What are your thoughts about the results of our research on the best time to buy a home? Feel free to share your comments below.