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October is hardly known as a popular time to buy a home. Usually, spring and summer are when we see a boom in residential real estate transactions. But the U.S. Census Bureau reports that sales of single-family houses in October increased 41.5% compared to just a year prior.
All told, 999,000 houses sold in October, at a median price of $330,600. At the close of the month, there were 278,000 new homes available for sale, representing a 3.3-month supply. That’s well below the four- to five-month supply needed to attain an equalized housing market (where neither sellers nor buyers have the upper hand).
Why did so many homes sell in October?
Fueling this substantial uptick in home sales was the fact that mortgage rates have remained at record lows since the summer. Despite inflated home prices, buyers have clamored to get in on those good deals, even if it means paying sellers more for their properties.
Is now a good time for you to buy?
Though mortgage rates remain competitive, a lack of housing inventory makes it a pretty tough time to buy. For one thing, it’s a seller’s market, so not only are you likely to pay more for a home now, but you may need to buy one as-is, without the repairs or even cosmetic improvements sellers would normally make before listing.
Also, limited inventory means you may get stuck compromising on certain home features. You could wind up with a kitchen that’s too small, a yard that’s oddly shaped and doesn’t allow for the swimming pool you’re hoping to install, or fewer bathrooms than what’s comfortable for your family. Or you could miss out on the neighborhood that’s ideal for you.
In fact, despite the extremely competitive mortgage rates available to buyers today, now’s actually not a great time to purchase a home. You may want to put your search on hold for a few months, and see if inventory opens up in early or mid-2021. And if you’re worried you won’t get today’s great mortgage rates, fear not. Given the state of the U.S. economy, there’s a good chance mortgage rates will stay low for quite some time. Waiting until next year to buy won’t necessarily mean getting subpar offers from lenders.
If you do delay your home search, you can use that extra time to your advantage. Work on boosting your credit score to snag the top rates, or save more for a down payment so that if needed, you can spend a little more on a property in better shape.
While home sales may have skyrocketed in October, that doesn’t mean buyers got the best deals. Many, in fact, may have snagged competitive mortgage rates only to wipe out that savings by overpaying for the homes they bought. If you wait a while before you make an offer on a home, you might avoid a similar fate.