One of the most common questions realtors get from prospective homebuyers is “when is the best time to buy a house?” Like many big question, there isn’t a simple answer and the right answer will look different from person to person. Below, we look at a few variables you might want to keep in mind when deciding when to make your next move, from what month has the highest home prices to mortgage rates.

Interpreting Home Price Data

At several points in this article, we’ll be referencing the following chart, which uses ten years of Davidson and Willamson Co. housing data to demonstrate the regular monthly median home price fluctuations over the course of an average year. We’ve also included a chart showing the last three years of monthly median home prices so you can see how this regular seasonal ebb and flow looks over the course of several years of real home prices. You may notice that, despite January and June having the lowest and highest average sales prices on the graph, we’ll talk about the preceding months as having the lowest and highest prices.

Home prices are recorded when a sale officially closes, usually 30 days after the seller accepts a buyer’s offer. This means that buyers who closed on their home for an absolute steal in January were house hunting and went under contract in December. So, as you read the graph below, keep in mind that the peaks and dips in the chart are the result of accepted offers the previous month.

Average of Monthly Median Home Prices from January 2011 to December 2021

*This chart shows the average seasonal fluctuations in median home sale prices over the last 10 years. Note the low prices in January and February and the peak in June.*

Monthly Median Home Prices from January 2018 to December 2021

This chart shows the last last three years of monthly median home prices in Davidson and Williamson Co. Note the dips around January of each year and peaks near June and July. This reflects the average seasonal fluctuations in the previous chart.

Time of Year

Like basketball and leaf peeping, real estate has a peak season. In the United States, that’s usually the spring and summer for a number of reasons. Families with children often want to get into their new home before the next school year starts, but don’t want to attempt a move mid semester. Even in the coldest parts of the country, winter cold and ice have given way to inviting spring breezes and flowers - and fewer snowed-out open houses. But perhaps the biggest factor is the lack of major holidays; few buyers or sellers want to add the stress of moving to an already packed holiday calendar, especially with so many late fall and winter holidays centering around the home.

With this in mind, many realtors encourage their clients to list their homes in the late spring. Historically, May has been the best time to list your home if you want top dollar. High demand means sellers can get the best price for their home while making the fewest concessions. For buyers, this means you’ll have more competition and may pay a little more, but you’ll also have more homes to choose from.

If you’re a buyer looking to pay less for a home, but don’t mind having fewer options, fall and winter are your best bet - specifically December. Fewer people sell and buy homes around the busy winter holidays meaning you’ll have less competition and are more likely to encounter highly motivated sellers. If managing the simultaneous stressors of holidays and house hunting isn’t for you, you’re still likely to get a good deal if you place an offer in January.

Looking Beyond Seasonal Fluctuations

If you’ve been following the housing market the last few years or even just casually watching the news, you know that the same affordable home in January 2021 is not nearly as affordable as it was in January 2017. While the last 20 years have seen some unprecedented highs and lows, when adjusted for inflation, home prices have slowly and steadily risen over the last century with a few booms and busts mixed in.

It’s understandable that homebuyers who came of age during the 2008 recession are hesitant to purchase a home that they fear may not hold its value. While a home is an investment, it’s also - well - a home. Return-on-investment isn’t necessarily the best metric to use if you’re purchasing a house to live in for years to come. If you’ve found yourself worrying that your new home’s value might drop next year, keep these things in mind:

You’ll likely be in your home for at least several years; try to take the long view rather than worrying about what home prices will look like in a year.
No one is psychic; don’t kick yourself if home prices drop next year or go up in five years.
For more than a century, real estate has slowly but surely risen in value; a dip in value in nine months will likely be more than offset in a few years.
As long as you can afford your mortgage payments, your house will still provide shelter, comfort, and security regardless of how it’s value fluctuates.

Instead of attempting to predict longterm market trends, we encourage you to consider these other other variables.

Interest Rates

Unless you’re purchasing your home in cash, you’re going to have to get a mortgage and that means paying interest. Interest rates are set by the Federal Reserve and are adjusted based on demand and inflation in an effort to keep the economy relatively stable. An increase of just a percentage point can mean paying thousands of extra dollars over the life of your loan.

Even if you’ve saved a sizable down payment, high interest rates might make your monthly mortgage payment unsustainable. Variable rate loans offer a lower initial interest rate, but your rate may be raised or lowered within a certain number of percentage points over the life of your loan. Before getting drawn in by the low introductory rate, make sure you can still afford your monthly mortgage payment in the event your interest rate is raised to it’s maximum.

Personal Finances

Personal financial factors like your credit score can impact both the amount your lender is willing to lend to you as well as the interest rate you’ll pay on it. Making sure you have healthy credit score can go a long way towards making your monthly mortgage payment manageable.

Before starting your home search, figure out what you can comfortably afford to pay towards a mortgage. If you’re not sure what an affordable mortgage payment is for you, a good rule of thumb is to keep your monthly housing costs less than or equal to 1/3 of your income; this is still the metric the U.S. government uses to measure housing affordability. If you can easily keep up with your mortgage payment, you can ride out a temporary drop in your home’s value.

Buyers and Sellers Markets

Like any market, real estate varies based on supply and demand. When demand is high and supply is low, sellers have more negotiating power. The pandemic housing market was an extreme sellers’ market. A spike in buyer demand and drop in both existing homes being listed for sale and new homes being built helped drive up prices and gave sellers an incredible amount of bargaining power. Here in Nashville, we saw houses selling in hours with aggressive bidding wars leading to some homes selling for $100,000 or more above asking price; some buyers made extreme concessions like forgoing an inspection in order to close a deal.

Most sellers’ markets don’t look nearly as extreme as the pandemic housing boom, but there are a few indicators you can keep an eye on if you’re waiting for the right moment to list your house:

your city or region has low housing inventory
homes near you are selling quickly (i.e.: homes are spending less than 30 days on market)
homes near you are consistently selling above asking price
homes near you are receiving multiple offers

In contrast, a buyers market places the ball in the buyers court. Increased housing supply and fewer house hunters can give buyers the opportunity to ask the seller for concessions or purchase a home at or even below asking price. The last notable buyers market was right after the 2008 recessions from 2011 to 2013. With low housing prices, lots of homes for sale, and many people hesitant or unable to purchase a home due to the state of the economy; buyers had a lot of bargaining power.

If you’re waiting to purchase a home until you have the most bargaining power, keep an eye out for these indicators:

your city or region has high housing inventory
homes near you are taking a while to sell (i.e.: homes are spending more than 30 days on market)
homes near you are consistently selling at or below asking price
homes near you are only receiving a few offers

Your Individual Life Plans and Housing Needs

Our personal lives and needs aren’t synced to the real estate market and you may need to sell your home in January or buy a home in a sellers' market. The right time to buy a house is when you’re ready and able. Big life changes like a new job, growing family, or simply a desire for a fresh start are the most important factors to keep in mind when deciding if it’s time to buy or sell alongside your personal financial situation.

Ready to Buy or Sell Your Home? Give Us a Call!

Buying or selling a home is a big decision, and there’s no one-size-fits-all answer to the question of when to buy or sell your house. A good realtor can help you decide when the right moment is for your unique needs, but the choice is yours at the end of the day. We hope this article helps you make your decision with more confidence. If you need help finding the right time to buy or sell your home, call Zelda Sheldon with Nashville Real Estate Rockstars at Benchmark Realty LLC: (615) 720-7192 or office: (615) 432-2919

When Is the Best Time to Buy (or Sell) My Home?