I’ve always wondered what kind of data exists to provide a recommendation to home sellers as to when the ideal time is to try and sell their home and to tell sellers how much of a difference timing makes. It would not be trivial for me to come up with this analysis on my own. Finally it dawned on me that the Case Shiller Home Price Index people have sort of answered this question for us in a roundabout way. You see, they produce both a seasonally adjusted price index and a non-seasonally adjusted price index and by comparing the two we can estimate the seasonal effect on home prices – assuming the Case Shiller folks did their statistical analysis correctly.
Looking at the last 12 months of Case Shiller data for Chicago single family homes I produced the graph below which shows the discount or premium that homes sell for at different times of the year. Be sure to read all the way to the bottom of this post to fully understand what this data means.
August is the best month and March is the worst month and the impact of timing could be +/- 2% or a 4% total difference, which on a several hundred thousand dollar home can be worth some real money. But let’s make sure we understand the data fully.
First, the Case Shiller index uses a 3 month moving average. The numbers for August are really an average of June, July, and August. So I shifted the data by one month – i.e. I’m using their September data to represent the month of August since that’s in the middle of the average.
Second, this data is based on closings for the given month. So their data for September represents the result of closings in July – September. If you want to close in August (the middle of that range) you would typically need to be under contract by June or July at the latest. And to be under contract by June you would probably want to be listed as early as March to give yourself 90 days to find a buyer – assuming you are willing to price your home competitively.
One more thing which should be obvious. As a buyer you would want to close in March for the best price. Of course sellers instinctively know that the “selling season” is in the spring and summer so they tend not to list properties during the winter. What that means for buyers is that there is less inventory available at that time of the year when the prices are most favorable – i.e. only the really serious sellers are out at that time of the year, which probably explains the better pricing. Then again, if more buyers tried to get in on the winter sales event I imagine that more sellers would come on the market then and the seasonal pattern would go away.