When you think of homebuying season, you likely imagine spring and summer. But according to a RealtyTrac study of over 32 million real estate transactions since 2000, the best month to close on a home purchase is October.
On average, October homebuyers get a 2.6 percent discount below estimated market value, according to the study. And the best day of the year to close on a home? October 8 with an average of 10.8 percent below estimated market value.
Here are a few other reasons why October is the best month to buy a house.
Sellers Are Motivated & More Willing to Negotiate
Home prices tend to decrease an average of $7,000 after Labor Day, especially in the Midwest, according to the National Association of Realtors. This could be because sellers are wanting to seal a deal before winter.
A home that was listed in the spring and then sat on the market all summer may incline its sellers to bring down their sales price or increase their willingness to negotiate. Because spring is the best time to list a home, an autumn-listing seller may have a pressing reason for putting their home on the market, such as a job relocation, which may give buyers more negotiating power.
Possibility of Increased Mortgage Interest Rates
Homebuyers have been enjoying historically low interest rates for some time, but the potential of the long-awaited federal funds interest rate hike may be a deciding factor for buyers sitting on the fence.
At the FOMC's latest meeting in September, the Fed was not ready to raise interest rates but Fed Chair Janet Yellen said she expects a federal funds rate hike to be appropriate before this year's end.
An increase in mortgage rates means less home affordability. If a new home is on your wish list, it's better to act sooner than later.
Cooler Weather Allows Buyers to Better Observe Home Efficiency
Home energy efficiency is a top-list item for many homebuyers. Walking through homes when the weather begins its seasonal change can give buyers a better idea of how efficient a home is during the cooler months.
Look to gutters and general yard upkeep as indications of how the sellers maintain their property. Paying special attention to drafts around windows and door and furnace function can help you identify the presence of home system issues, as well.
Less Buyer Competition
Though fall is still a busier homebuying season than winter, buyers are less likely to see the heavy traffic of spring and summer homebuying. With that being said, there is less competition when it comes to making an offer, which allows you more time to browse homes and consider them at a more leisurely pace.
Regardless of the season you plan to purchase a home, you have a greater advantage over other buyers by meeting with a mortgage banker and receiving a pre-approval or a loan commitment (even better) prior to making an offer.
Looking to buy a home in the near future? Download our free Mortgage 101 Handbook for everything you need to know about buying and financing your first home.