It’s house-hunting season.
Between October and December each year, starter home inventory in the US gets a 7% boost, according to new data from Trulia.
In 70 of the 100 largest US metros, the number of starter homes on the market reaches its annual peak during this time, meaning those looking to buy their first home will have more to choose from this time of year.
Trulia defines a starter home as any listing priced below $US232,751, based on weighted averages from the 100 largest metro areas in the US. In the third quarter of 2017, the median listing price of a starter home was $US171,624.
The next tier, trade-up homes, are categorized as any listing priced between $US232,752 and $US360,469. A listing above that threshold is considered a premium home.
The number of homes available for first-time buyers the US tends to fall between July and September, when trade-up and premium home inventory is at its peak.
Since 2012, starter home inventories in the summer months have declined by as much as 20.4%, driving prices up and rendering homeownership unattainable for many young Americans.
Starter home inventory peaks in fall, but the best time to buy a home is winter.
Though starter home listings begin to increase and reach a peak during the fall, buyers looking for their first home will find better deals by waiting to make an offer until after the holidays. By the time January rolls around, according to Trulia, prices for all categories of homes drop to their lowest prices.
Think of it as shopping the sale rack — swimsuits are moved to the clearance rack when stores need to make room for winter coats. Homeowners who have had their house on the market since summer or fall will be extra motivated to sell during winter, even if that means accepting a lower price.
According to Trulia, the average first-time homebuyer has to put nearly 40% of their income toward their mortgage payments — 2.3% more than last year. That’s a far cry from the standard measure of housing affordability, which says Americans should spend 30% or less of their pre-tax income on housing.
For first-time homebuyers in particular, house hunting during peak inventory season — but waiting to buy — could pay off. You’ll be able to explore what’s out there and refine your list of “wants” and “needs” before you have to act fast when prices are low after the holidays.