Is Now a Good Time to Buy a House? [September 2023 Data]

If you’re a first-time home buyer, September 2023 is a good time to buy a house.

This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment. It highlights why 67 percent of renters would buy a home if their lease ended this month, and why the window to act is shrinking. 

We made an accompanying video on our YouTube channel titled, Is Now A Good Time To Buy A Home. The four main ideas are:

1. Mortgage rates already peaked
2. First-time home buyer programs are still available
3. There’s a scarcity of homes for sale
4. Home sellers are getting more greedy

Let’s discuss why now is a good time for first-time buyers to buy a house.

Mortgage Rates Are Falling

Mortgage rates have been mostly steady since the start of the year.

Except for two weeks in May 2023, when the threat of a government debt default pushed rates up, 30-year fixed-rate mortgage rates have kept within a tight range.

According to Freddie Mac and its weekly survey, mortgage rate variance through the year’s first seven months is three-quarters of a percentage point, which puts 2023 among the most stable years for mortgages in a half-century.

Stable mortgage rates make planning for buying your first home easier.

Meanwhile, extended periods of mortgage rate calm can be followed by periods of volatility. Rates can move up or down sharply. We experienced a quick run-up in late-August. That’s in the past.

As September begins and the economy steps back its torrid pace of growth, mortgage rates are breaking lower.

30-year fixed-rate mortgage rates are now below their 4-week average.

For home buyers, though, mortgage rates should rarely be a worry. If you lock in a mortgage rate and then rates increase, you’ve locked in a below-market rate. But, if rates go down and your rate is an above-market rate, you can attempt to refinance down.

Knowing this, September is a good month to buy a home.

First-Time Home Buyer Discount Programs

Another reason September is a good time to buy a house is that eligible first-time home buyers can still access discounted mortgage rates through the First-Time Home Buyer Mortgage Rate Discount program.

The first-time buyer program is available on loans backed by Fannie Mae and Freddie Mac. It lowers mortgage rates in all 50 states for low- to moderate-income buyers with no credit score or down payment requirements.

The program applies to all conventional mortgage loans, including:

• The 3% down payment program HomeReady
• The 3% down payment program Home Possible
• The 3% down payment program Conventional 97
• Fannie Mae HomePath

It does not apply to the Conventional 100 mortgage, a no-money-down mortgage for first-time buyers.

Other government agencies made buying a home more affordable, too

The Federal Housing Administration recently reduced its annual mortgage insurance premiums (FHA MIP) by 0.30 percentage points for buyers, lowering monthly payments on FHA-backed loans $300 per year per $100,000 borrowed.

The FHA mortgage insurance premium reduction is the agency’s first time lowering FHA MIP since 2015.

Home Buyers Outnumber Home Sellers

A third reason why September 2023 is a good time for first-time buyers is that the shortage of homes for sale is growing.

According to the National Association of REALTORS® and its most recent Existing Home Sales report:

• Each state averages approximately 21,000 homes for sale
• 74 percent of homes now sell within a month
• The typical home sells in 20 days

At the current pace of home sales, every home listed in the MLS would be sold in 3.3 months, suggesting it’s a seller’s housing market. Supply of six months is considered a market in balance.

Many people want to buy a home today. Few people want to sell. The market isn’t balanced. This is how home values rise.

So, consider buying a home in August when homes are relatively less expensive.

Home Sellers Are Testing Their Pricing Power

The fourth reason why September 2023 is a good time to buy your first home is that the psychology of home sellers is shifting. Here’s what we mean.

Buying and selling real estate is an emotional transaction. Two primary emotions – fear and greed – drive buyer and seller decisions.

In a down housing market or bad economy, fear dominates real estate. Sellers worry their homes won’t sell. They cut prices more aggressively and negotiate more frequently. For buyers, this lead to good deals.

Home seller greed takes over in a rising housing market and a growing economy. Sellers want more money and better terms and know they can get it. Buyers end up overbidding for properties and rushing their offers to purchase. Buyers may also waive protections such as the right to a home inspection out of fear of “not getting the house.”

Seller greed is bad for buyers, and this month, the market moves farther away from fear toward greed. Sellers now know they have control. Buyers are already getting fewer concessions and have fewer ways to lower their interest rate.

Buyers who act quickly will get access to the best homes and prices. Later in 2023, home affordability will be worse.

Click to get your mortgage pre-approved now.

You Can Buy A Home Without A Big Down Payment

You don’t need a big down payment to buy your first home.

First-time buyers can achieve their American Dream of homeownership without a 20 percent down payment.

If you want to buy as soon as possible for any of these reasons, start a pre-approval:

• Your lease is ending, and your landlord won’t renew
• You’re moving out of your parent’s home
• You’re ready to buy a pet-friendly home

There are over a dozen low- and no-downpayment mortgages for first-time buyers, and local housing offices offer eligible buyers access to down-payment assistance programs.

You may even get discounts and deals based on your profession.

There are special mortgages for nurses, for example, and mortgages for teachers. There are mortgages for first responders, firefighters, and law enforcement.

In some cases, you can buy a home with a $100 downpayment.

Furthermore, mortgage lenders lowered credit score requirements on government-backed loans to make qualifying more accessible and fair. Congress passed a law that changed how medical debt and credit scores work.

The typical home buyer received a 22-point FICO boost. 

Affordable housing bills can also help, including home buyer tax credits, down payment assistance, and cash grants. 

This video reviews 14 first-time home buyer programs.

What To Do Next: Get Pre-Approved To Buy Your Home

If you plan to buy a home in the coming weeks or months, get a mortgage pre-approval first. 

Mortgage pre-approvals are a dress rehearsal for your home purchase. They use today’s live mortgage rates and market conditions to show how much home you can afford to buy while setting realistic boundaries for your home search and budget.

Every successful purchase starts with a pre-approval, and buyers should get one as early in their home search as possible.

Also: give your credit score a boost. 

Ask for a copy of your credit report and review it for errors. Supplement your monthly bill-paying with a credit-building service such as StellarFi that can work in as few as 30 days.

Every extra point helps.

Third, use the HUD website to research down payment assistance programs in your area. Some programs may have been discontinued or defunded in the new year, so call the local provider to verify availability.

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