Seasonal Home Prices

What you need to know

Seasonal fluctuations in home prices are a common occurrence in real estate markets. Various factors, such as weather conditions, buyer behavior, and market dynamics, can influence these fluctuations. In this article, we will delve into the data provided by Zillow representing the percentage of seasonal adjustments for home prices from January to December over the past few years (2018-2023). By being aware of these trends, real estate agents can provide better insights to their clients about the best time to buy or sell.

The Data

The following are the percentage of seasonal adjustments for home prices for each month

• January: -1.8%

• February: -2.5%

• March: -2.3%

• April: -1.2%

• May: 0.4%

• June: 2.1%

• July: 3.0%

• August: 3.3%

• September: 2.0%

• October: 0.6%

• November: -0.5%

• December: -1.0%

Upon examining the data, we observe an expected pattern where home prices tend to rise during the summer months and decline during the winter months. All told, it's a range of 5.8%. This means on average a property that sells for $400,000 in February would go for around $423,530 in August (not counting the real rise or fall of the housing market at the time). Conversely another property selling for $400,000 in the Summer might only receive offers around $377,130.

Analysis:

Summer months often coincide with increased market activity in the real estate sector. Favorable weather conditions, longer daylight hours, and the presence of potential homebuyers during vacation seasons contribute to a surge in demand. Consequently, the limited supply of homes available for sale leads to higher competition among buyers, driving prices upward.

On the other hand, the winter months often experience a slowdown in real estate activity. Cold weather conditions, holiday festivities, and a general preference to postpone major financial decisions during this time can contribute to a decrease in buyer demand. As a result, home sellers may adjust their prices to attract potential buyers in a more subdued market, leading to a decline in prices.

Highlighting the Difference:

The difference in home prices between summer and winter months can be significant. Based on the provided data, the average adjustment percentage for home prices during the summer months (June to August) is around 2.8%, while during the winter months (December to February), it averages around -1.8%. This highlights the substantial disparity in price fluctuations between these two seasons.

It's important to note that these percentages represent the seasonal adjustments applied to home prices, which are a measure of changes relative to the expected seasonal pattern. The adjustments help in isolating the seasonal component and provide a clearer understanding of the underlying trends.

Now What?

Understanding seasonal fluctuations in home prices is crucial for both buyers and sellers in the real estate market. By recognizing the recurring patterns observed between summer and winter months, buyers can make informed decisions on when to enter the market, potentially leveraging lower prices during the winter season. Sellers can strategize their listing prices and marketing efforts to capitalize on the increased demand during the summer months.

While the provided data showcases a consistent trend, it's essential to consider that real estate markets can vary regionally and are influenced by various local factors. Therefore, in next weeks article, the regional breakdown will be provided and analyzed. Don’t want to miss it? Subscribe to our newsletter here!

By staying informed about seasonal fluctuations and understanding the dynamics of the real estate market, both buyers and sellers can navigate the market more effectively and make informed decisions aligned with their goals and preferences.