Buying a Home This Summer? 4 Things You Need to Know

Ready to tackle the housing market? Keep these things on your radar before jumping in.

Summer is a great time to hit the beach, take a vacation, and, for many people, start house hunting. After all, during the summer, the weather is generally cooperative, and it's easy to get a sense of a home's curb appeal when it's not covered in mounds of snow.

But buying a home this summer in particular may prove challenging. Here's what you need to know.

1. Inventory is still extremely limited

Though housing inventory rose slightly in May compared to April, there's still a massive shortage of homes on a national level. In fact, May's level of listed homes was still around 31% lower than it was a year prior.

Because there's such little selection, you might really struggle to find a home you like or that meets your family's requirements. You may also find yourself stuck in a series of bidding wars when other buyers try going after the same properties you're interested in. That can be both frustrating and stressful, and bidding wars can lead to you paying more for a property.

2. Home prices are still high

In April, home prices saw a 14.6% gain compared to the previous April. If you attempt to buy a home this summer, you'll probably end up paying a lot more for it than you normally would. That means you'll need to bring a higher down payment to the table, and you'll need to take out a larger mortgage.

3. Mortgage rates remain competitive

Though home prices may be inflated, today's mortgage rates are low enough to help offset them. As of this writing, the average interest rate on a 30-year fixed loan is 3.101%. And for a 15-year fixed loan, it's 2.403%. If you have a higher credit score -- one in the mid-700s or above -- you're more likely to qualify for the best rates in your neck of the woods. And if not, you may want to work on boosting your credit before you apply for a home loan.

4. You may have less competition during the fall

Summer is a popular time for families to move because it doesn't conflict with the school year. But if you don't have children and don't have to worry about that schedule, it could work to your benefit to delay your home search until after Labor Day.

First of all, if you wait a bit, more homes could hit the market. We already saw a modest increase in inventory based on May's numbers, and that trend could continue as the summer rolls along. But even if inventory levels stay low, you might still have less competition once families get caught up in the school year or choose to pause their searches so they don't have to uproot their kids.

Buying a home this summer may not be the smoothest process due to the state of the market, but that doesn't mean you won't be successful. The key, either way, is to know what type of housing market and environment you're getting into.