Is it still a bad time to buy a house?

October 6, 2021 - 6 min read

The 2021 housing market is improving

This summer has been a bad time to buy a house for many (as you probably know if you’re in the market).

But take heart! Because fall 2021 is looking like it’ll be a better time for buyers.

If the experts are right, more homes will come onto the market in October. And prices could moderate after record-breaking increases.

But there’s one caveat, which is that mortgage rates look like they’ll keep rising.

So what should you do? Get busy in October as homes for sale become more numerous and affordable. But act fast, if possible, so you don’t get bitten by higher mortgage rates.

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Home buying challenges are still present. But it’s not such a bad time to buy a house

The summer of 2021 was rough for homebuyers. Only about one-third had their first purchase offer accepted. And most had to write multiple offers — often experiencing serial disappointments — according to

Higher home prices were a big factor. Core Logic, a company that tracks those prices, reported in September:

“Home prices nationwide ... increased year over year by 18% in July 2021 compared with July 2020 and increased month over month by 1.8% in July 2021 compared with June 2021.”

No wonder so many are coping with “homebuyer fatigue.” And some are choosing to hit pause on house hunting while they rebuild their morale and wait for lower home prices.

Unless you really need to take a break from house hunting, you should redouble your efforts in October — and over the rest of the fall and winter.

But waiting too long could prove a costly error.

That’s because rising mortgage rates can dash buyers’ dreams as they see their home buying budgets decrease (and their monthly mortgage payments increase).

And, at the time this was written, mortgage interest rates were climbing fast.

So, unless you really need to take a break from house hunting, you should redouble your efforts in October — and over the rest of the fall and winter.

With luck, this season could prove a brief window of opportunity when you have a wider choice of homes but higher rates haven’t fully set in.

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Will the housing market improve this fall and winter?

Fall is traditionally a good season to buy a home. It’s when less serious, fair-weather buyers turn their attention to the holiday season. And when those with school-year deadlines have already bought and are settling in.

In fact, reckons that “Nationally, the best time to buy a home is the week of October 3-9.”

But don’t panic if that week has already passed by the time you read this. Because we could have months of easier housing markets.

Indeed, went on to say, “The 2021 homebuying season has aligned with pre-pandemic seasonal patterns, with a familiar sweet spot for buyers expected in the fall.”

Forbes concurs. It said in August:

“While a full-on celebration might be too soon, prospective homebuyers can breathe a little easier, based on predictions from real estate experts. Prices are beginning to decelerate in some areas as more inventory has become available for single-family homes.”

And we agree with both of them. Because it’s looking likely that the housing market will ease over 2021’s fall and winter. Just don’t expect miracles.

Housing supply is increasing, but not everywhere

In late September, Dave Ramsey’s Ramsey Solutions reported that the number of available homes nationwide has increased by 4% compared to a year earlier. But that’s patchy.

In big cities, there are 10% more available homes on average. But that’s much higher in some individual markets. For example, in San Jose, CA, the inventory of homes for sale is 92% higher than 12 months ago.

But in some places, there are actually fewer homes on the market: 16% fewer in St. Louis, MO. So this is a ZIP code lottery.

There’s less buyer competiton in fall

Still, there’s more good news for fall buyers in terms of competition.

Forbes quoted a Los Angeles real estate agent, saying “Mortgage applications have dropped to an 18-month low, and we are seeing some real buyer fatigue in the market. Sellers are responding to lower buyer enthusiasm with price reductions.”

The more rivals who drop out of the market owing to homebuyer fatigue, the easier it is for those with the stamina to continue to get themselves noticed — and their offers accepted.

Prices could be moderating

Supply and demand is economics 101. We all know that the bigger the supply of a commodity, the lower the price, given constant demand. So will we see lower home prices soon?

Probably not, unfortunately (though nothing’s impossible).

It’s more likely we’ll see today’s rapid price growth slow down, but not reverse. Because there’s still enough pent-up demand from buyers like you to keep prices up.

But that’s still very good news if you’ve been chasing eyewatering increases in the places where you’ve wanted to buy. And you can say with confidence that now’s not such a bad time to buy a house.

Low mortgage rates might not last much longer

There’s another thing to keep in mind if you want to buy a house this year. And that’s the interest rate market.

Mortgage rates have been at or near record lows throughout 2021. This has helped ease the burden of high prices for buyers. (Remember that a lower mortgage rate equates to a lower mortgage payment and a bigger home buying budget.)

But the low-rate trend could be reversing.

Mortgage rates moved sharply higher during the second half of September 2021. And your chances of getting a conventional, 30-year, fixed-rate mortgage (FRM) beginning with a 2 look slim.

Will mortgage rates go down again?

We’re back to most mortgages being in the 3%-and-up range.

Might that get better? Well, nothing’s impossible. But it’s looking more than unlikely.

Indeed, at the time of writing, three powerful forces are aligned to make higher rates probable. Those are:

  1. New Fed policies — On November 3, the Federal Reserve is likely to announce an end date to its ‘quantitative easing’ program that’s kept mortgae rates low over the past year. Chances are, mortgage rates have been rising in anticipation of that change and will continue higher on implementation
  2. The debt ceiling debacle — The Treasury Secretary believes that, absent the debt ceiling being raised, the U.S. will begin defaulting on its debts for the first time ever on October 18. And that’s likely to lead to higher borrowing costs across the board, including mortgage rates
  3. Lower rates of new Covid-19 infections — Covid cases have been tumbling since mid-September. And that’s giving investors a new economic optimism that should lead to higher mortgage rates. To learn more about how investor sentiment affects your rate, you can read this article on how mortgage rates are determined

Phew! It’s hard to remember a time when such powerful forces were arrayed against low mortgage rates. And they may well eventually take those average rates to the high-3% or even 4% mark. (Though, by historical standards, those would still be very low rates.)

The bottom line: Fall could be your best time to buy

With luck, rates will take a while to rise substantially. So you may have a brief window of opportunity when you can enjoy a better supply of homes, moderating prices, and a very attractive mortgage rate — all at once.

Just don’t let the “perfect” rates that were available earlier this year become the enemy of the “good” ones that are likely to be around for some time yet.

Is it still a bad time to buy a house? Well, it’s not great. But it’s noticeably better than it was in the summer.

If you’d like to monitor what’s happening to mortgage rates, including predictions as to where they’re heading, drop in regularly on our daily feature, “Mortgage and Refinance Rates Today.”

Good luck with your house hunting!

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Peter Warden
Authored By: Peter Warden
The Mortgage Reports Editor
Peter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.