I’d recommend doing a homestay for these reasons:
You’ll get a lot more chances to speak Japanese
You’ll get to eat delicious home-cooked food for free or nearly free
If it all goes well, you’ll be able to stay with them again in the future
They’ll take care of you. Your room will always be cool/warm enough, you’ll get a decent bed, etc.
Probably safer than a dorm, too.
I’ve been in touch with my homestay family for about 4 years and still visit them sometimes.