Is It a Good Time to Buy a House?

Get ready for competition if you’re buying this spring. But compared to 2023 and 2022, conditions look slightly better for buyers.
Abby Badach Doyle
Barbara Marquand
By Barbara Marquand and  Abby Badach Doyle 
Updated
Edited by Johanna Arnone Reviewed by Michael Soon Lee

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Editor’s note: In March 2024, the National Association of Realtors agreed to pay $418 million and change its rules to settle a lawsuit over agents' commissions. Here's how the NAR settlement could affect home buyers and sellers.

If you're wondering whether it's a good time to buy a house, ask this instead: Is it a good time in my life to buy a house?

Housing market trends give important context. But whether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.

Here's what to consider.

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The market outlook for home buyers

These are some factors affecting buyers in today's market.

Mortgage rates remain stubbornly high

The average interest rate on a 30-year fixed-rate mortgage was 6.84% annual percentage rate (APR) for the week ending March 21, up 18 basis points from the previous week and up 24 basis points from a year ago, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of 1%.

Average weekly mortgage rates

Mortgage type

APR

30-year fixed mortgage

6.84%

15-year fixed mortgage

6.16%

5-year adjustable

7.82%

Averages are for the week ending March 21, 2024, according to rates provided to NerdWallet by Zillow.

Mortgage rates have improved since autumn, when the 30-year rate topped 8% in October. But buyers haven’t seen much relief this spring. With inflation remaining higher than expected, the 30-year fixed rate has averaged above 6.7% throughout February and March. If the economy eventually cools in 2024, as many experts predict, mortgage rates are likely to see a modest decline.

Another bellwether to watch is the Federal Reserve: If the Fed announces a rate cut at any point this year, which seems possible as long as inflation gets under control, mortgage rates are likely to come down. After a series of 11 increases to the federal funds rate starting in March 2022, the Fed has kept things steady since September 2023. Even a fraction of a percentage point would offer buyers more relief.

Higher rates shrink buying power because they make home loans more expensive. For example, the monthly payment for a $350,000 house with a 20% down payment would be $1,679 with a 6% mortgage rate on a 30-year mortgage, not including home insurance and property taxes. With a 7.5% rate, the monthly payment would be $1,958 — $279 higher.

You can't influence average rates, so focus on the things you can control:

  • Shop around for the best deal. Especially given today's higher rates, buyers can save $600 to $1,200 per year by applying for loans from multiple mortgage lenders, according to a February 2023 study by Freddie Mac, the government-sponsored entity that buys conforming loans from mortgage lenders.

  • Make sure you can afford the monthly mortgage payment. A home affordability calculator can help you crunch the numbers.

  • After getting approved for a home loan, consider locking in the mortgage rate until the loan closes to protect against further rate increases.

Home supply is still limited

A shortage of homes for sale continues to make this a tough market for buyers.

In February, there was a 2.9-month supply of homes on the market nationwide, according to the National Association of Realtors (NAR), meaning it would take about three months at the current pace for all the properties to sell. Supply is still well below favorable conditions for buyers. In a balanced market with plenty of buyers and properties for sale, the supply would last five to six months.

But as spring approaches, inventory is starting to move. In February, existing-home sales grew 9.5% from January, the highest monthly increase in about a year. That’s an optimistic sign for buyers waiting for more choices on their house hunts.

"Additional housing supply is helping to satisfy market demand," NAR Chief Economist Lawrence Yun said in a news release. "Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices."

If mortgage rates decline sometime in 2024 (as forecasters predict), we’re likely to see existing-home sales strengthen — and more competition in the market.

Home prices keep climbing

The national median price for existing homes sold in February was $384,500, up 5.7% from February 2023, according to the NAR.

All four U.S. regions — Midwest, Northeast, South and West — saw year-over-year price increases in February. Here's a regional look at median prices and year-over-year price changes:

  • Midwest: $277,600 up 6.8%.

  • Northeast: $420,600, up 11.5%.

  • South: $354,200, up 4.1%.

  • West: $593,000, up 9.1%.

As a buyer, lean on your real estate agent to understand home values in your area so you can make a competitive offer without overpaying.

Competition remains steady

Despite rising home prices, demand still outpaces supply. That means buyers should expect competition when making an offer on a home. As mortgage rates fall, competition is likely to go up. If you’re ready to buy, there’s no time like the present to start shopping.

According to the Realtors Confidence Index (a survey of the NAR’s members), homes listed for sale in February received an average of 2.7 offers, the same as last month and last year. More than half (56%) of respondents said properties sold after less than a month on the market, about the same as last year (57%) and up a bit from 53% in January. The number of cash offers is the highest it’s been since March 2014. In March, 1 in 3 sales (33%) were all-cash transactions, up slightly from 32% last month and a jump from 28% last year.

In February, 1 in 5 homes (20%) sold above list price, up from 16% in January but down from 24% last year.

Your readiness to buy a home

Ask yourself these questions to explore whether you're ready to buy a home.

Prepared to put down roots?

Think about your life goals, relationships and interests. How long can you see yourself living in this location?

Ideally, you'd want to remain in the home long enough for rising property values and your equity to exceed the costs of buying and selling, including real estate commissions and mortgage closing costs. That will typically take several years.

You could also be subject to capital gains taxes if the home appreciates in value and you sell it after less than two years.

How's your job security?

A mortgage is a big commitment and can become a stressful burden after a job loss, so it's not a good time to buy a home if you think you'll get laid off.

Wait until your employment is stable before thinking about buying a house.

Are you financially prepared?

Here are the three main ingredients to evaluate.

Savings

You'll need money for a down payment and mortgage closing costs as well as for moving and other expenses after you buy the home. The down payment requirements vary by the type of mortgage and the lender. The more you put down, the lower your monthly mortgage payment.

The typical down payment for first-time buyers is 8% and for repeat buyers is 19%, according to an NAR survey of home buyers who purchased a primary residence from July 2022 through June 2023.

Credit

Lenders generally offer the best mortgage rates and terms to borrowers with credit scores of 740 and above, although you can qualify for a mortgage with a score in the 600s. The options are much slimmer, and loan costs can be higher for borrowers with a score in the 500s.

If your credit is marginal, it might make sense to postpone buying a house and use the time to work on building your credit.

The average FICO credit score for closed mortgage loans to purchase homes in the past 30 days was 733, according to mortgage data provider ICE Mortgage Technology.

Debt

Lenders look at your debt-to-income ratio (DTI) to help determine whether you qualify for a mortgage. Your DTI is the percentage of your monthly gross income that goes toward monthly debt payments, including housing costs, as well as car, student loan, credit card and other debt obligations. Lenders like to see a DTI under 36%, although it's possible to qualify with a higher ratio. The lower your DTI, the better your chances of qualifying for a mortgage and getting offered the lowest available rate.

The average DTI for purchase mortgages in the past 30 days was 39%, according to ICE Mortgage Technology.

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