Every winter, as the temperatures drop, the housing market cools. Let’s explore what happens to the housing market in the winter based on the data. Then we’ll look at factors that drive these seasonal changes and what licensed real estate agents can do to keep their businesses running smoothly during the winter.
What Happens to the Housing Market in the Winter?
Here’s what we see happen every year in the late fall and early winter based on data from Redfin.
The number of homes available for sale noticeably decreases for the months of December, January, and February. This has been especially problematic in 2021 and 2022 when inventory is already at record lows. Today’s buyers are having a hard time finding a home because there are so few available for sale.
Winter inventory of 2018 dipped to around 1.8 million homes available for sale, then bounced back up to around 2.4 million homes in the summer of 2018. By January 2021, inventory was down around 1.4 million, and by January 2022, we barely had a million homes available. Based on the annual trends, we expect inventory to increase as we get into the spring and summer. But our supply of homes will still be lower than in pre-pandemic years.
Homes Take Longer to Sell
Every year, we see that homes sit on the market longer during the winter and sell more quickly during the summer. From 2017 until the winter of 2020/2021, it was typical for homes to take near 60 days to go under contract in the winter and around 30-35 days in the summer. But, as with the inventory of homes available, days on market have been dramatically impacted by the pandemic. In the summer of 2021, homes were selling in around 15 days, and even winter listings in 2021/2022 were selling in under 30 days.
Prices Temporarily Dip Slightly
While home values generally appreciate over time, the growth isn’t linear. Values grow fasters in some months than in others. And, during the winter months, it’s common to see prices dip slightly before rebounding a month or two later.
Median prices peak each year in the spring and summer. Then they dip a bit each winter before seeing additional growth the following spring.
Why Is the Winter Market so Different from the Summer Market?
We’ve seen what happens to the housing market in the winter, but why is this the case? There are a few reasons for the seasonal housing market slump:
Families with kids don’t want to move during the school year. So sellers with kids are less likely to list their homes, and buyers with kids are less likely to look for new homes.
We’re busy with other things during the holiday season. December is usually a whirlwind of holiday parties and preparations. People don’t typically have time to get their homes market-ready or start a home search in December.
Shorter daylight hours and bad weather take some of the fun out of house hunting. Buyers typically prefer to look at homes during the daylight in good weather.
What This Means for Real Estate Professionals
Since real estate agents and brokers are paid on commission, the winter housing market slump means lower income in the winter. But this doesn’t have to create extra stress on your real estate business. There are lots of ways to weather the winter real estate conditions.
Plan ahead financially. Save some of your income from the hot summer months to get you through the cool winter months.
Explain the benefits of buying in the winter to your clients. If price is important to your buyers, they might be willing to move up their home search schedule by a few months to save some money on their purchase.
Schedule your vacation around the slow months. You won’t miss out on as much business as you would if you took a vacation in the summer, and you will be reenergized for working extra hard during the busy season.
Take advantage of the slower months to take care of necessary tasks. You could complete your continuing education courses, plan your marketing strategy for the coming year, or build your real estate website.
The winter season may have a big impact on the housing market. But when you know how the seasonal trends work, you can plan your real estate business operations around them and come out stronger each year!