Best Time to Buy a House
The best time to buy a house this year has probably passed. It was a week in the early fall which represents a balanced view of market conditions favorable for buyers. Nationally, the best time to buy in 2022 was the week of September 25 to October 1. It can still be a good time to buy a home only if you can afford it. Many families are having affordability issues due to rising mortgage rates, and the problem is only likely to worsen if the Federal Reserve continues to raise rates – something that many analysts say is likely to occur again.
The Fed has now hiked rates at six straight meetings, something it hasn’t done since 2005. According to an analysis by the real estate listings website Realtor.com, the best time to buy a house was in the last week of September. This was the result of an optimal mix of housing market variables that give buyers the upper hand, such as lower pricing, greater inventory, less competition, and more time to make decisions.
As summer came to an end, inventory increased, price rise slowed, time on the market began to level off, and price reductions increased, indicating that this year's homebuying will follow a more regular pattern, which may be greater than usual given the cyclical rebalancing that is also taking place. Buyers, on the other hand, continue to experience the effects of uncertain economic conditions.
Affordability issues confront potential purchasers, paving the stage for the latest real estate makeover. Regardless, the regular seasonal tendency, along with an already cooling market, will favor persistent, knowledgeable buyers who are ready to buy. Realtor.com had anticipated that the final week of September in 2022 might see roughly 50 percent more active listings than the average for the remainder of the year.
In addition, buyers could save more than $20,000 on a median-priced home compared to those who purchased during the housing market's peak in the summer, when a median-priced home cost $450,000. During that period, the demand is normally 8.5% lower than a regular week, and homes remain on the market for approximately one week longer than usual.
Additionally, there are more price reductions than usual. Realtor.com’s experts attribute these changes in the market to seasonal factors. Not only do kids return to school in the fall, but the weather also cools off, making showings and inspections harder to conduct. (Plus, the cold reduces curb appeal.) As a result, demand drops.
According to Redfin's analysis, during the four weeks ending September 4, home-viewing activity plummeted, while the proportion of sellers lowering their prices remained at record levels. As a result of declining demand, fewer homes were sold for more than the asking price since February 2021, and the average sale-to-list price ratio reached its lowest point since March 2021. Hence, that was probably the best time to buy a house this year as the housing market always cools down.
Following a year and a half in which the average property sold for more than its list price, the average home sold for 0.3% less than its list price during the four weeks ending September 4. The winter of 2022 is expected to be colder than usual, with mortgage rates near or even above 7% as of November 17, 2022.
It's no secret that rising mortgage rates have made buying a home more difficult, even as price growth has slowed. The Fed is likely to continue the tightening cycle of raising interest rates, keeping mortgage rates higher. If low home prices are your top priority, consider delaying your purchase until later in the winter, as prices tend to decrease as the holiday season approaches.
Observe mortgage rates to ensure that your patience pays off and that rising mortgage rates do not derail your plan for a lower monthly payment. Whatever your priority, get to know your local market by spending time looking at homes in your desired area and setting up price alerts so you are notified when a home that meets your criteria hits the market.
Why the End of September Was the Best Time to Buy a House?
This week historically favors buyers the most. High inventory, below-peak prices, decreasing demand, and a more controlled market tempo. School and weather schedules contribute to this seasonal slowdown. Families looking to move while kids are out of school look to close on a home before the back-to-school rush.
Families centering house search decisions around school districts and the school calendar, plus warmer weather that makes home showings and inspections simpler and foliage that boosts curb appeal, contributes to an expected rise in activity. As fall approaches and more families bow out due to school, demand wanes and prices drop as leftover inventory stays on the market. Early fall is a good time to buy a house since they have more alternatives at a lower price.
Some of the largest housing markets in the country have their local best time to buy a house. The week of September 11-17 was the best time to buy for New York, Los Angeles, Chicago, Seattle, and Minneapolis metropolitan areas, among others. Each of these strikes a different balance of market factors during this week as it relates to buyers.
In New York and Los Angeles, homes on the market during this time take 30.3% longer to sell, on average, compared to their respective seasonal peaks when homes sell fastest. Buyers who feel intimidated or frustrated by the blistering pace of sales earlier this year may find the market more approachable as autumn approaches.
More Homes for Sale Were Listed
Inventory rises early fall. This year, inventory remained high through the best buying week. In the last week of September, the listings were expected to be 9.5% more than average and 12.9% more than at the start of the year. 2022 is an outlier compared to previous years since higher mortgage rates dampened buyer desire. Adjusting for this trend, the last week in September was expected to see 46% more active listings than this year's average. Around 780,000 listings during that period, which is around 400,000 more than in late February.
Less Competition From Other Buyers
During the best time to buy a house, homebuyers will have less competition. Pre-pandemic, July had peak homebuyer demand, as indicated by Realtor.com views. As buyers rushed to beat rising prices and borrowing rates, the 2021 housing market peaked in the spring. Spring and summer have the most home buyers, which means more competition for buyers.
Historically, demand is 26.9% lower during the Best Week to Buy and 8.5% lower than the average week. The advantage for home buyers during that time was likely to be at least as good this year as high prices and mortgage rates continue to reduce buyer purchasing power. The best week to buy a house also helps people who need extra time to decide.
The year's best week slowed by 21.1% from its peak. With a peak market pace of just 31 days in May, based on seasonal trends and a cooling market, the end of September was added about a week to the time a typical home spent on the market this year, and more than two weeks more than the peak this May.
More Price Reductions Were Expected
The best time to buy a house is also one of the busiest weeks for price reductions throughout the year, with an average of 5.2% of houses experiencing price reductions that week in the past. However, due to the recent market change, 2022's Best Week was expected to see more than 6.0% of properties with lowered prices. Based on inventory projections, it was expected to result in approximately 48,000 price decreases this week across the country.
It translates to a monthly price reduction share of approximately 24.8% caused by a combination of buyers exiting the market, which reduces demand, as well as a buildup of inventory over the year. This year, the number of purchasers exiting the market is significantly more than in previous years, which means that even more sellers lowered their house prices to attract buyer attention.
Housing Markets Where the Best Time to Buy was Sept 11-17
| Metro | Active Listings vs Avg | Views Per Property vs Peak | Days on Market vs Peak | Median Listing Price vs Peak | New Listings vs Avg | Price Reductions vs Avg |
| New York-Newark-Jersey City, NY-NJ-PA | 8.2% | -25.6% | +15 days | -4.3% | 12.8% | 0.4% |
| Los Angeles-Long Beach-Anaheim, CA | 14.4% | -31.4% | +10 days | -6.2% | -3.0% | 0.9% |
| Chicago-Naperville-Elgin, IL-IN-WI | 16.6% | -32.3% | +9 days | -6.5% | 1.1% | 1.2% |
| Seattle-Tacoma-Bellevue, WA | 32.0% | -47.6% | +21 days | -7.0% | 12.5% | 1.9% |
| Minneapolis-S. Paul-Bloomington, MN-WI | 27.2% | -34.2% | +7 days | -9.9% | 12.4% | 2.2% |
| St. Louis, MO-IL | 12.2% | -24.6% | +10 days | -5.1% | 5.4% | 1.5% |
| Charlotte-Concord-Gastonia, NC-SC | 9.5% | -29.3% | +8 days | -4.2% | 0.2% | 1.2% |
| San Antonio-New Braunfels, TX | 14.0% | -35.1% | +13 days | -3.3% | -5.9% | 1.2% |
| Memphis, TN-MS-AR | 7.6% | -25.6% | +10 days | -3.8% | -4.9% | 0.4% |
How to Finding the Best Time to Buy: Realtor.com
To determine the best time to buy, Realtor.com examines multiple housing market metrics. These include: 1) listing prices, 2) inventory levels, 3) new “fresh” listings, 4) time on market, 5) homebuyer demand (realtor.com listing views), and 6) price reductions. They score each week of the year from 0-100 based on the number of active listings.
A given week will score highly if it has more listings compared to other weeks of the year. They score the other metrics, in the same way, so each week has six different scores for active listings, new listings, listing prices, days on market, price reductions, and views per property. (In the case of prices, lower prices score higher. Same with views per property). They then rank each week by the average of those scores. The week with the highest overall score is the best time to buy. The best week to buy a house represents a balanced view of market conditions favorable for buyers.
Source:
- https://www.realtor.com/research/best-time-to-buy-2022/
- https://www.redfin.com/news/housing-market-update-surging-rates-slow-buying-and-selling/
