Buy First or Sell First? A Slower Housing Market Changes the Math

Planning the timing, liquidity, and risk of moving from one home to the next

For a long time, one of the easier assumptions to make in financial planning was that a reasonably desirable house, priced reasonably well, would sell reasonably quickly.

I am using the word “reasonably” three times because the housing market appears to be testing all three of them at once.

The latest numbers show a market that has become considerably less forgiving for sellers. Realtor.com reported more than 1.16 million active listings nationally in September, up 5.4% from a year earlier. More than 20% of listings had undergone a price reduction, the highest September percentage since 2018, while the stock of homes under contract was down 4.1% from a year ago.¹

Mortgage rates are a big part of the story. Freddie Mac reported that the average 30-year fixed mortgage was 7.40% as of October 8, 2026. A year earlier, the same rate averaged 6.30%.²

That creates an unusual push and pull. Higher rates make a new purchase more expensive, which can keep potential buyers from entering the market. At the same time, homeowners sitting on older mortgages at 3%, 4% or even 5% have a strong financial incentive to stay put rather than exchange that loan for one around 7%. That lock-in effect can restrain the flow of new listings. Yet total inventory is still building because the homes that do come to market are not clearing as quickly as they once did.

Redfin reported that U.S. pending home sales in September fell to their lowest level since 2014, outside the brief pandemic shutdown in 2020. The total supply of homes for sale rose to its highest level since March 2020, and 14.5% of homebuying deals fell through during the month, the highest share in Redfin’s records.³

Here in Charlotte, the change is also visible. Realtor.com reported a median 64 days on market in September, while 26.2% of active listings had undergone a price reduction.⁴

None of this means the housing market is collapsing. It does mean the assumption that your house will sell quickly deserves more scrutiny than it did a few years ago. And that becomes particularly important when you want to buy your next home before selling the one you already own.

The Problem Is Not Buying the Next House. It Is Connecting the Two Transactions.

This conversation comes up fairly often in our planning meetings. A client finds a home they really like, but the house they currently own has not sold yet. Financially, they may be in terrific shape. They have substantial home equity, significant investments and more than enough net worth to afford the new property. Their problem is timing.

Perhaps several hundred thousand dollars of equity is sitting inside the existing house while the new purchase needs to close in three weeks. On a personal balance sheet, everything works. Unfortunately, the closing attorney would still prefer cash.

A few years ago, it was relatively easy to assume that this overlap might last a month or two. I am much less comfortable making that assumption today. Depending on the property, pricing and local market, a sale can take materially longer than expected. We have seen circumstances where the process extended well beyond the initial expectation, which is exactly why I do not want the financial plan depending on a quick sale.

That does not mean every home is going to sit on the market for twelve months. It means I do not want anyone structuring their finances around the assumption that theirs definitely will not.

There are really two ways to approach the problem: buy first and solve the funding gap, or sell first and solve the housing gap. Both can work. They simply create different risks.

Buying First: Convenience Comes With a Carrying Cost

Buying the new house first can make life considerably easier. You avoid temporary housing, you move once, and you may be able to make a cleaner offer without a home-sale contingency. For someone competing for a particularly desirable property, that flexibility can matter.

The financial question is whether you can comfortably own both homes for much longer than you expect. Before doing this, I do not want to know only whether the client can handle three months of two mortgages, taxes, insurance, utilities and maintenance. I want to know what happens at six months. I want to know what happens at twelve.

More importantly, I want to know whether carrying the old house starts affecting the decisions we make elsewhere. Would we eventually have to sell investments and recognize substantial gains? Would retirement distributions have to increase? Would borrowing become uncomfortable? Would the pressure of carrying two homes cause the seller to accept an offer they otherwise would have rejected?

If the answer to those questions starts becoming uncomfortable, we probably have too much of the financial plan riding on the timing of a real estate transaction.

Examples of Ways to Fund the Gap

One option, in a fairly narrow set of circumstances, is a 60-day IRA rollover. The IRS generally allows an eligible IRA distribution to be returned to an eligible retirement account within 60 days, potentially avoiding current taxation on the amount properly rolled over. But the rules are strict, including a general limitation of one IRA-to-IRA 60-day rollover in any 12-month period across a taxpayer’s IRAs. Not every distribution is rollover-eligible; required minimum distributions, for example, cannot be rolled over. Amounts not properly rolled over can become taxable and may also face additional tax depending on the circumstances.⁵ Because the consequences of missing the requirements can be significant, I view this as an exceptional planning strategy rather than routine bridge financing, and I would want the client to confirm eligibility, timing and tax consequences with the IRA custodian and a qualified tax professional before taking a distribution.

That may be worth evaluating when the existing house is already under contract and the timing difference between closings is relatively small. What I do not want to do is withdraw several hundred thousand dollars from an IRA while a house is merely listed and assume the sale will happen before Day 60. A short-term liquidity tool becomes a very different transaction if the real estate timeline slips. Depending on the household, conventional mortgage, bridge or home-equity financing may also be available and should be compared based on cost, qualification requirements, flexibility and risk.

Another possibility is a securities-backed line of credit. For someone with a substantial taxable investment account, we may be able to borrow against eligible securities rather than selling them. This can provide temporary liquidity without immediately realizing capital gains, and the loan can potentially be repaid when the home sells. The tradeoff is that it is still debt, the rate may change, and the securities supporting the loan can decline in value. SBLOCs are commonly structured as demand loans, and the lender may change collateral requirements or credit availability, issue a maintenance call, or require repayment. If additional cash or collateral is not provided when required, pledged securities may be sold, potentially at an unfavorable time and with tax consequences. The SEC and FINRA specifically highlight market declines, rising rates, maintenance calls, forced liquidation and potential tax consequences as risks that should be understood.⁶

And then there is the wonderfully boring option: cash. Cash is not particularly exciting, but this is one of the reasons we hold it. If we know someone may move within the next year or two, building additional liquidity ahead of the transaction can be tremendously valuable. It reduces the number of things that have to go right at exactly the right time.

Sometimes earning a little less on a portion of your money is a perfectly reasonable price for not having to make a bad financial decision on somebody else’s schedule.

Selling First: Trading Financial Risk for Inconvenience

The other strategy deserves more attention in today’s market: sell the existing house before buying the next one.

Financially, selling first can reduce financing and liquidity complexity. Once the sale closes, we know exactly how much equity is available. There is no guessing about what the house will ultimately sell for, no carrying two properties indefinitely and no need to manufacture short-term liquidity simply to get through closing.

The obvious drawback is that you may not have found your next house yet. That inconvenience can be solved in several ways.

One option is negotiating a seller leaseback or rent-back. You sell the home, receive the proceeds and then remain in the property for an agreed period while paying rent to the new owner. It is not available in every transaction, and the buyer has to agree to it, but when it works it can create a useful bridge. Terms and availability vary, so the arrangement should be coordinated with the real-estate professionals, lender, insurer and attorney as appropriate.

Another alternative is temporary housing. That could mean a short-term rental, furnished apartment or even living with family for a period of time. Nobody particularly enjoys moving twice, but I would at least compare that inconvenience against the potential cost of carrying two expensive properties for nine months.

Storage can also become part of the plan. A client can sell, move nonessential belongings into storage and rent something smaller while searching for the right next property. That sounds inefficient until you compare it with buying the wrong house because you felt rushed.

There is also a strategic advantage to selling first that should not be ignored. Once the old house is gone, you become a buyer with known liquidity and considerably less pressure. You know exactly what you can spend. You may be able to make an offer without a home-sale contingency. And if the right property does not appear immediately, nothing is forcing you to manufacture a solution.

In a market where buyers have more negotiating leverage, patience can itself be an asset.

Mortgage Rates Make the Timing Question More Important

The average 30-year fixed mortgage stood at 7.40% on October 8, according to Freddie Mac.²

For a homeowner sitting on a 3% mortgage, moving is not simply a question of buying a more expensive house. Even borrowing the same amount can result in a materially higher monthly payment because the cost of financing has changed so dramatically. That helps explain why some owners are reluctant to list at all.

At the same time, higher rates reduce purchasing power for the next buyer. Realtor.com calculated that the move in mortgage rates from late August through late September mechanically reduced purchasing power by roughly $11,500 for a home shopper working with a fixed monthly budget.¹

That puts sellers in an awkward position. Some potential sellers are reluctant to give up attractive existing mortgages, which constrains new listings. Meanwhile, the buyers who are shopping face higher monthly payments, which suppresses demand. The result can be a market with relatively few transactions, more negotiating, more price reductions and considerably less certainty about how quickly a particular home will sell.