Spring is typically perceived as peak homebuying season, but a new report from real estate marketplace Trulia suggests now is a better time to look if you are a millennial in the market for your first home.
Contrary to popular wisdom, the inventory of “starter homes” peaks in October and rises seven percent during the Autumn months. In 70 of the top 100 housing markets, the survey finds the strongest season for starter homes is between October and December.
Prices are lower as well. With more homes on the market, listing prices tend to be around 4.8% less in the winter than in the summer.
The Trulia Inventory and Price Watch report also finds the fall season is especially good for first-time buyers who are looking in the western states. It recorded the largest increase in fall inventory levels and steepest drop in list prices in California, Colorado, Oregon and Arizona.
San Jose, which tends to be one of the most expensive housing markets in the country, leads with a 42 percent seasonal difference in number of starter homes on the market in the fall and spring.
Homebuyers in Wichita, Kansas stand to enjoy the best affordability and seasonal price drop. Trulia predicts starter homes will list for 18.6 percent less in the fall than they will in the spring.
Inventory levels continue to fall
House-hunting during the Autumn months does not guarantee you'll find what you're looking for, however. The housing market continues to deal with a shortage of homes for sale, especially in the categories of starter and trade-up homes.
The number of starter homes has dropped 8.7 percent during the past year while the number of trade-up homes – the homes people buy when they sell their starter homes – has declined by 7.9 percent. The decline has emboldened sellers to increase asking prices, making affordability a pain point in many markets.
“Realtors this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings – especially at the lower end of the market – and fast-rising prices that are straining the budgets of prospective buyers,” said Lawrence Yun, the National Association of Realtors' chief economist.
First-time buyers who wait until spring and summer to shop for a home are going to find fewer homes to consider and will likely have to pay more for it if they find the one they want.
This past summer, the Trulia report found the volume of starter home listings plunged 20.4 percent from the sale period in 2016. Trade-up shoppers found 12.5 percent fewer homes on the market