Written by David Dodge 

As spring approaches, the homebuying season is heating up, and many potential buyers are left wondering: Is it a good time to buy a house? While traditional wisdom suggests that spring is the prime time for home purchases, the answer isn't as straightforward as it seems. Instead of solely focusing on market trends, it's crucial to consider your personal circumstances. So, let's dive into the current housing market and explore whether now is the right time for you to make a move.

Understanding the Current Housing Market

Mortgage Rates: A Stubborn Challenge

As of March 20, the average interest rate for a 30-year fixed-rate mortgage stands at 6.8% APR. This figure represents an 18 basis point increase from the previous week and is 4 basis points higher than this time last year. Here’s a quick snapshot of current mortgage rates:

• 30-year fixed mortgage: 6.8%
• 15-year fixed mortgage: 6.01%
• 5-year adjustable: 7.2%

What You Can Do:

• Shop Around: Don’t settle for the first mortgage offer you receive. Different lenders may provide varying rates and terms.
• Use a Home Affordability Calculator: This tool can help you determine what you can realistically afford based on your financial situation.
• Lock in Your Rate: Once you receive loan approval, consider locking in your mortgage rate to protect against potential increases.

Inflation and Economic Factors: The Fed's Stance

The Federal Reserve has recently decided to keep the federal funds rate steady, which means that significant rate cuts are unlikely in the near future. With low unemployment rates and ongoing inflation concerns, the economic landscape remains uncertain. The next Fed meeting on May 6-7, 2025, will provide further insights into future policy directions.

Supply of Homes: A Spring Thaw

The housing inventory is beginning to increase, which is a welcome sign for buyers. A balanced market typically has around six months' worth of inventory, but as of February 2025, unsold inventory was at 3.5 months—up from 3 months in February 2024. More inventory means more options for buyers, helping to alleviate some of the pent-up demand.

Home Sales and Prices: A Mixed Bag

Home sales have seen a 4.2% increase from January to February, with first-time buyers making up 31% of those sales. However, the national median home price has risen to $398,400, marking a 3.8% increase from the previous year. Here’s a breakdown of regional price changes:

• Midwest: $295,500 (+5.8%)
• Northeast: $464,300 (+10.4%)
• South: $358,800 (+1.9%)
• West: $614,600 (+3.6%)

Competition: Easing Up

The competitive landscape is starting to flatten. Homes received an average of 2.3 offers in February, down from 2.6 the previous month. Additionally, fewer homes are selling above their list price, with only 21% of homes achieving this feat in February. Homes are also taking longer to sell, with a median time on the market of 42 days.

Are You Ready to Buy? Key Questions to Consider

Before making a decision, reflect on these important questions:

1. Are You Prepared to Put Down Roots?

   • Consider how long you plan to stay in the home. If you anticipate moving within a few years, it may not be the best time to buy.

2. How’s Your Job Security?

   • A mortgage is a long-term commitment. If your job situation is uncertain, it might be wise to wait.

3. Are You Financially Prepared?

   • Savings: Ensure you have enough for a down payment, closing costs, and moving expenses. Typical down payments are around 9% for first-time buyers and 18% for repeat buyers.
   • Credit Score: A score of 740 or higher will get you the best rates, but options are available for those with scores in the 600s.
   • Debt-to-Income Ratio (DTI): Lenders prefer a DTI under 36%. A lower DTI can improve your chances of mortgage qualification and better rates.

Final Thoughts

The housing market is evolving, and while competition has softened, demand remains robust. Whether now is the right time for you to buy a house ultimately depends on your financial readiness, job security, and long-term goals. If you feel prepared, starting your homebuying journey now could be advantageous before mortgage rates and home prices rise further. Remember, the best time to buy a house is when you are ready—financially and personally. Happy house hunting!