Why Summer Isn’t the Best Time to Buy a Home
by Elizabeth Renter
July 15, 2020
Generally, homebuying season — with its flurry of newly listed homes commanding higher prices — ramps up in early spring and is in full swing when schools break for summer. 2020 is different. While it appears we will still have a homebuying season, it’s likely to occur a bit later than normal as prospective buyers pause to rethink their homebuying plans amid record unemployment, tighter lending practices and general economic uncertainty.
According to a NerdWallet survey conducted online by The Harris Poll in May, 30% of Americans who planned to buy homes in 2020 say they no longer plan to do so and 35% are unsure if they will this year. This uncertainty is understandable: The full effects of the pandemic remain to be seen. But while the following retrospective study of seasonal trends may not be immediately applicable, pricing and inventory flows will likely right themselves as we move further from the initial impact of the coronavirus pandemic, barring another economic event.
Using 2015 through 2019 data from Realtor.com, we looked at market trends across 50 of the most populous metros in the United States. We found that — with few exceptions — homes are most expensive in June and July, and cheapest in January and February, with inventory typically at its highest and lowest in those months, respectively. For buyers, this means the most expensive time to buy is also the time of year when they’re more likely to find a home they love.
If we could look forward and anticipate the data for this year, we’d likely see a delay in some of those trends. For example, the downward path that prices typically begin taking as kids are headed back to school could come later.
If we’ve learned anything in 2020, it’s that things can be unpredictable. But seasonal trends in metro housing markets have fairly reliable patterns that we will see once again. Gleaning insights about these trends from recent years will still be relevant in months and years to come, as buyers try to determine the best time to start home shopping.
- Hot markets in the summer come with high price tags. In 44 of 50 of the largest metropolitan areas, the most expensive month to buy a home falls in June or July. Buyers who can wait until winter will find the cheapest months are most often January or February.
- Large metros see greater volatility from the cheapest to most expensive months. Nationwide, the average sale price jumps 9% from January to June, but 13% among the largest metros from the cheapest to most expensive months.
- Inventory peaks in summer as homes fly off the market. In addition to prices, active listings are highest in warm months. Demand is high, so homes don’t last long — in San Jose, California, and Seattle, homes spent just 24 days on the market, on average, in their highest-priced months.
Highest prices in summer, lowest in winter — usually
Our analysis of the past five years confirms that the housing market generally heats up with the weather. Across the nation, home sale prices are generally lowest in January and highest in June, but there is some variance across the 50 largest metros.
January is the most affordable month to buy a house in 30 of the 50 metros analyzed; February in 19 of them. New York City’s cheapest month, on average, came in March.
Though prices and competition are lower in the winter, so is inventory, in most areas. Because there are fewer homes on the market, buyers may have a harder time finding the home that satisfies their entire wish list.
As the weather warms, homes begin hitting the market. Prospective buyers come out in droves and competition is high. June is the most common priciest month, with 28 metro areas seeing the highest prices then. July is the costliest for 16 metros, and May for one (San Jose). Just a handful of metros buck the warm weather trend. November is the most expensive month in Raleigh, North Carolina, and four metros save the priciest month for last, in December (Las Vegas, Orlando, Phoenix, and Riverside, California).
Prices climb 13% on average in big metros
On average, nationwide, sale prices jump 9% from January to June. But in the largest metros, they jump 13%, on average, from the cheapest to most expensive months, indicating that less populous areas see less volatility.
While San Jose experiences the highest price jump in dollars — $143,000 from January to May — a flat dollar comparison doesn’t quite tell the whole story. For example, in Milwaukee, prices only climb $42,000 from February through June, but this represents a dramatic 24% increase, the highest of metros analyzed. San Jose’s seemingly monstrous $143,000 increase amounts to 17%.
Buyers should keep things in perspective. At the low end of the cheapest-to-priciest month climbs, 7% may not seem like a big leap when compared to a metro where prices rise 24%. But 7% of several hundred thousand dollars is still a lot of money, so even those shopping in a relatively stable metro can expect to feel a pinch when buying at the most expensive time of year.
Inventory climbs in summer, falls later than prices
In addition to sale prices, the supply of homes for sale, or inventory, is most often lowest in winter months among the most populous areas. There are a combination of factors at play here, not the least of which is the holiday season — preparing to buy or sell a home takes time many people don’t have at the end of the year. Also, moving in the cold can be difficult, and some people may be waiting to sell until they can command a higher price.
Generally, both sale prices and inventory (active listings) begin gradually rising from a winter low throughout the first months of the year. Nationally, the average sale price peaks a bit earlier than inventory, beginning the annual creep downward in July, while national inventory continues to climb into fall.
The play between rising and falling prices and inventory throughout the year is very metro-specific. The New York City metro data somewhat follows the national trend, with the highest sale prices and inventory occurring between June and September. On the other hand, Seattle inventory climbs dramatically through summer and nosedives after October. And in Phoenix, prices creep up gradually until December while inventory peaks in February, when most other markets are at their lowest.
Click on the graphic for a full-size, responsive version.
Depending on where they’re house hunting, buyers may find a sweet spot — a period in the year where average prices begin falling but there are still plenty of homes to choose from. It can be a gamble, though. Wait too long and the homes they would actually want to live in will be bought up.
Summer sees quickest sales despite high prices
Among the largest metros, homes spent an average of 76 days on the market in the lowest-priced months, compared with 51 days in the most expensive months. Nationally, that spread was even wider: 95 days on market compared with 61.
High-priced months are hot market months, in which more people are both selling and buying homes. After being cooped up for the winter, folks are ready to visit open houses and rent moving trucks, and homes don’t stay on the market long.
Homes in San Jose and Seattle, both very competitive and high-priced markets, spent the shortest amount of time for sale — 24 days, on average, in May and June, respectively.
In the winter, despite lower prices, homes can stay on the market for months. The most sluggish winter market was seen in Pittsburgh, where homes that sold in February hung on for 114 days, on average. Low inventory, the holidays and cold weather all contribute to this slowdown.
Ultimately, and perhaps counterintuitively, competition is highest when housing prices are highest. Buyers in the market during a booming season should be ready to act quickly and aggressively. Getting preapproved before looking at homes can increase the competitiveness of a buyer’s offer. Even then, it’s not unusual to put in numerous offers on multiple homes before going under contract in a strong seller’s market. If buyers can wait for a less competitive time, they’ll find lower prices but compromise by having less to choose from. A local agent can help identify unique qualities of the local market and help balance budgetary interests with the desire to get under contract.
We summarized 2015-2019 monthly sales and listing data from Realtor.com to analyze market trends throughout the year in 50 of the most populous metropolitan areas and across the nation as a whole.
Mentions of “largest” metro areas refer to largest by population.
Data analyzed for the Los Angeles metro area included only 2015 through 2018, due to changes made by Realtor.com in August 2019 that made monthly figures after that period not directly comparable.
Throughout the report, references to cities represent the primary city in a metro area. All data is metro-level data or national.
“Prices” refer to sale prices, unless otherwise noted.
Days on market is defined as the number of days between the initial listing and the closing date, or the date it is taken off the market.
The NerdWallet survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from May 5-7, 2020, among 2,051 U.S. adults ages 18 and older, among whom 427 were planning to purchase a home in 2020. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Marcelo Vilela at [email protected]