Three years after the pandemic first upended the traditional homebuying season \u2014 and life as we knew it \u2014 some data indicates a return to seasonal housing fluctuations.<\/p>\n
Most people have heard of \u201chomebuying season,\u201d even if they\u2019re unclear on when that season actually occurs. Generally, it refers to the period of higher prices, sales volume and more homes on the market in the warmer months. This \u201cseason\u201d is only part of the flows that happen during a year in the housing market.<\/p>\n
Home prices, sales and listings usually follow a somewhat predictable pattern, rising and falling during certain months. But since the COVID-19 pandemic and resulting economic turbulence upended those patterns beginning in 2020, we\u2019ve been waiting for their return. Some data indicates we\u2019re getting closer to that normal.<\/p>\n
But first, a note on what remains different:<\/p>\n
Home prices climbed swiftly in the months after pandemic lockdowns, and while that\u00a0growth has leveled off\u00a0and prices may even come down in some markets, there\u2019s no expectation that we\u2019ll return to pre-pandemic prices. Nor can buyers expect a return to\u00a0ultra-low mortgage rates. Barring slight fluctuations, higher rates are here to stay, and as consumers have adjusted to this possibly harsh truth, demand has begun to normalize. All of this means that even if movement in the data returns to more predictable patterns, the numbers themselves won\u2019t resemble what they once did.<\/p>\n
See<\/strong>: Home sales fall in June as listings dwindle\u00a0<\/p>\n Generally, prices are at their lowest at the start of the year, climbing into the summer months before falling gently in late autumn and then beginning the cycle again. Most often, they end the year higher than they started but lower than their peak.<\/p>\n Home prices peaked in June or July in eight of the past 10 years, according to my analysis of Realtor.com data. The two years that bucked this trend: 2020 and 2021.<\/p>\n In both of those years, sales prices peaked in December, as they continued their ascent. In 2022, as demand fell because of rising rates late in the year, the typical sales price for a home consistently fell from its June peak, returning to its January level \u2014 $315,000 \u2014 by the end of the year and marking a more dramatic winter decline than usual.<\/p>\n What it means for 2023 buyers:<\/strong>\u00a0Price growth this year isn\u2019t expected to match the unusually robust ascent of 2020 and 2021 but likely won\u2019t decrease in the latter half of the year as dramatically as it did in 2022, either. Buyers are becoming accustomed to higher rates as the new normal, and unlike last year when those rates were a shock, they will continue to shop for homes in the latter half of 2023. This means you may see prices peak in the summer before a slight decline in the fall, resembling a more traditional seasonal path.<\/p>\n More<\/strong>: Mortgage rates fall as U.S. inflation slows<\/p>\n In a typical year, the number of active listings begins at a low point, climbing in spring and peaking in the fall before beginning the end-of-year decline. Inventory peaks later than prices, on average.<\/p>\n In 2020, inventory started low, according to script, but continually declined through the end of the year as the pandemic raged. The number of listings in 2021 followed a more seasonal trajectory but were a fraction of the usual volume. In other words, inventory began an ascent in spring, peaked in fall and began coming down late in the year, but there were roughly half as many listings as there were before the pandemic. Last year, inventory staged a bit of a recovery, with the number of listings more than doubling from February to October.<\/p>\n What it means for 2023 buyers:<\/strong>\u00a0This year, the trajectory of homes on the market may resemble more of a normal season, with listings rising into autumn, but high mortgage rates will continue to help keep inventory down. This is because owners with a mortgage likely have lower rates \u2014 they bought or refinanced during the sub-4% period that just ended. So, many of these would-be sellers are unlikely to want to give up that existing low-interest mortgage in exchange for the 5%-7% rate they may face this fall.<\/p>\n For 2023 buyers, this means continued slim pickings. The selection of homes available may have improved from 2021, but there still aren\u2019t enough. If you\u2019re shopping for a home with a long list of must-haves, you can expect to struggle. Instead, be flexible. Know what you\u2019re willing to compromise on \u2014 location, home price or features, for example \u2014 to deepen the pool of potential listings that fit the bill.<\/p>\n Related<\/strong>: \u2018There\u2019s nothing in the data that shows prices crash\u2019: U.S. housing market is showing remarkable resilience.<\/p>\n Home sales dipped in spring 2020 as the nation shut down in the early months of the pandemic. From there, they took off and didn\u2019t abate to the normal extent as months got cooler. Later that year and in 2021, the number of existing homes being sold remained high through the end of the year, a time when sales are normally waning. In 2022, however, rising mortgage rates helped temper demand and bring the number of homes sold down in the third and fourth quarters, according to my analysis of National Association of Realtors data.<\/p>\nSales prices return to summer peak, winter valley<\/strong><\/h2>\n
Higher rates hamper inventory recovery<\/strong><\/h2>\n
Sales trends appear to normalize in 2022<\/strong><\/h2>\n