For at least two years, the real estate market has been on a hot streak that has seen soaring prices and bidding wars. Many buyers have resorted to all-cash offers to beat the competition, not to mention paying well above asking price.
Recently, however, the market has begun to show signs of slowing. Amid fears of a recession and increasing interest rates, the volume of existing home sales declined 14.2 percent year-over-year between June 2021 and June 2022, according to the National Association of Realtors (NAR).
At the same time, the seasonality of real estate activity, which was upended by the pandemic, has begun returning to more traditional patterns. That means spring and summer may once again be the busiest time of year, while fall and winter could return to being slower months.
Median cost of buying a house in the U.S.
The cost of U.S. homes has been on a steady upward climb of late. In June 2022, the median existing-home sale price jumped 13.4 percent from one year previously, reaching a record-high $416,000, according to NAR. Here is a month-by-month look at median home prices for the past year.
|Source: National Association of Realtors data|
|June 2022||$416,000||up from $366,900 in 2021|
|May 2022||$408,400||up from $355,000 in 2021|
|April 2022||$395,500||up from $340,700 in 2021|
|March 2022||$379,300||up from $326,300 in 2021|
|February 2022||$363,700||up from $310,600 in 2021|
|January 2022||$354,300||up from $303,600 in 2021|
|December 2022||$358,800||up from $309,200 in 2020|
|November||$358,200||up from $310,800 in 2020|
|October 2021||$355,700||up from $313,000 in 2020|
|September 2021||$355,100||up from $311,500 in 2020|
|August 2021||$361,500||up from $310,400 in 2020|
|July 2021||$364,600||up from $305,600 in 2020|
|June 2021||$366,900||up from $294,400 in 2020|
Median real estate prices have been soaring for years — an incredible 124 consecutive months of year-over-year increases, per the NAR. This pushes many prospective buyers, and particularly first-time homebuyers, to the sidelines. Affordability is a significant concern, as are fears that the market may be due for a correction amid such steep price growth. Still, experts who rely on median sales data to help gauge the overall health of the market say the outlook remains strong.
Buying a house in winter
Traditionally, homebuyers get a better deal on purchase prices when colder weather kicks in. A 2021 report from ATTOM Data Solutions shows that buyers who closed in October paid the most minimal “above market premiums” on home purchases at just 2.9 percent. December represents the next best bargain, with premiums at 3.4 percent, followed by November and January, both at 3.9 percent. (By comparison, buyers who closed in May typically paid an 11.5 percent premium.)
Scoring a bargain during winter, however, is not necessarily a sure thing amid an overheated housing market. “During the past two years, it was not at all cheaper [here] to buy a house in the winter,” says Keri Rizzi, a Realtor with HomeSmart Homes and Estates in White Plains, New York. “But if the market continues to correct itself in coming months, it may once again become true that the best deals to be had are found in winter.”
The cost you’ll pay for movers is generally more affordable during winter as well. “Moving companies tend to charge less in the winter because demand decreases,” says Bill Gassett, a RE/MAX Realtor and owner of Massachusetts-based Maximum Real Estate Exposure. “The peak moving season is spring to summer, and the prices from moving companies throughout the country are reflective of that.”
- Less competition: In general, fewer buyers are looking for homes during the winter, which means there’s less competition to face. “Lower competition means higher power to negotiate,” says Dino DiNenna, a Realtor with Southern Lifestyle Properties in Hilton Head, South Carolina.
- Lower prices: Home sale prices are directly proportional to market competition, says DiNenna: “Competition is lower during winter, and so median sale prices are also low at that time of the year.”
- Increased agent assistance: Come winter, real estate agents are likely to be more available to guide you through the buying process than they would be during peak summer season. “As there are fewer buyers in the market during winter, Realtors enjoy a more flexible schedule,” DiNenna says. “This means you can expect better attention and improved one-on-one advising from your Realtor in winter.”
- Less inventory: Typically, there are fewer homes on the market during winter. “During snowy months, sellers may not want the hassle of moving,” says Rizzi. In addition, “parents may not want to change their kids’ schools during the school year, and sellers realize they won’t get top dollar for their homes and may wait until the higher-priced spring selling season.”
- Weather difficulties: Depending on where in the country you live, winter weather can make viewing homes far more challenging. Closings may even be postponed due to weather conditions, says Rizzi.
- Home inspections can be tricky: It can also be more difficult to inspect homes in cold weather. “You cannot determine a roof’s condition if the roof has snow on it,” DiNenna points out.
Buying a house in summer
It’s no secret that home prices tend to be higher in the peak summer season. Between April and August, homes sell above list price in greater numbers than any other time of year, according to Redfin data and Fit Small Business statistics.
Still, there are few tactics that can help you save money if you hope to buy during this most competitive time of year. If your timeline is flexible, consider waiting until the very end of summer to make an offer on a home. “The last two weeks of August are a great time to buy, because so many other buyers have quit their search for the summer and are taking vacations,” says Katie Severance, a Realtor with Douglas Elliman in Palm Beach, Florida. “Also, sellers get worried and fear that an offer might not be coming at all, so their motivation is increased at the end of August.”
Yet another option is to look for fixer-uppers that are priced to sell. “If you’re handy and feel like practicing your HGTV skills, then roll up your sleeves and look for homes in need of some updating,” says Rizzi.
Homes that are being sold by the owners, rather than through a real estate agent or broker, may also present a saving opportunity. “For sale by owner properties, especially those still sitting on the market for weeks or months, may be tired of the nonstop solicitations and ready to sell to a savvy buyer,” says Rizzi.
- More inventory: The increase in summertime listings means buyers have the luxury of choice. “With more homes available on the market, you’re likely to have a diverse array of options to choose from,” says DiNenna.
- Visibility: During warmer months, buyers are able to get a more complete look at prospective homes. “Summer affords buyers the best chance to see every inch of a property, to really get a feel for the overall look and layout of a home,” says Rizzi.
- Easier moving: School is out and the weather is generally more pleasant, making the process of moving more manageable than it might be in winter.
- Increased competition: You certainly won’t be alone when home shopping in summer — this is the peak time for the real estate industry, and the most fiercely competitive.
- Higher prices: With increased competition comes multiple bids and, ultimately, higher prices. “During summer, the bidding wars are intense and multiple offers are common,” says DiNenna. “As a result, the prices are higher at that time of the year.”
- Higher moving costs: Moving company prices are also impacted by supply and demand. And come summer, when demand increases, so do the prices you’ll pay a moving company. All that hard work in the heat might not be too pleasant either.
Other factors impacting housing costs
- Mortgage rates: As rates head upward, homebuying becomes more expensive. “When interest rates rise just one point, buyers lose about 10 percent of their buying power,” says Severance. “That preapproval for a $500,000 home a few months ago [may] now only allow the buyer to afford $450,000.”
- Lack of inventory: An under-supply of homes also causes prices to increase. For the past few years now, demand for homes has far outpaced supply — though there are signs the shortage is easing, which may bring a cooling of home prices.
- High inflation: Rising inflation has a tangible impact on the overall cost of living. Buyers that previously felt ready to spend some of their savings on a home may now prefer to keep it for the ever-increasing costs of day-to-day expenses.
- Recession fears: When consumers feel nervous about the economy, especially amid talk of a possible recession, they tend to back off of spending, or even stop altogether. “This has an immediate impact on housing costs — sometimes so immediate that it feels like the real estate market changed overnight,” says Severance.