In the past few days, I imagined being a house seller wanting to find the ideal moment to put my house on the real estate market.
So I first wondered what month most houses go on the market.
In 66.6% of the cases between 2010 and 2020, December and January were when most houses went on the market in the United States.
But why would I want to know that as a seller?
If I know in which month most houses go on the market, I will also know when there is more seller competition.
If the demand stays the same from the buyer side, this would mean potential downward pricing pressure because of an increased inventory size.
But it gets a bit more complicated than that, as you will learn in the rest of this article.
Then I also thought that as a buyer, you probably would like to know that too.
Because with an increased inventory size, there is the same buyer demand, and I would probably have a better shot at negotiating price and finding what I am looking for.
What Month Do Most Houses Go On the Market?
I like to find patterns, and somehow, I wanted to find a reliable rule to tell you that most houses go on the market in month X.
To find that out, I researched historical housing supply data from 2010 to 2020, and I only selected the respective months with the highest supply.
As a source, I used the Fred Economic Data to collect and select this information, showing the ratio of houses for sale to sold.
You can find my results in the following table below.
|Year||Month With Highest Supply|
|2015||September and November|
After I created that table, I also needed to find out the frequency of the months in terms of percentages.
Because when we calculate the percentages of the frequency between 2010 and 2020, they can also help to determine the chance of a particular month being the one where most houses go on the market.
It isn’t statistically significant if you only use one year for that.
So what did I find out?
In 66.6% of the cases between 2010 and 2020, December and January were the months with the highest housing supply in the United States.
In other words, these were the months when most houses went on the market.
Specifically, December and January had the same frequency with 33.3%.
I know past performance doesn’t predict future performance (an old trading rule).
Nevertheless, regarding probabilities, we can say with some certainty that these two months will likely also have the highest supply.
I also found this data surprising because when I researched some well-known websites about this data, I often found that spring and summer were the months where supply was highest, contradicting the data I found.
Does The Housing Supply Have Any Influence on the Demand?
Since I was curious, I also wanted to see if the housing supply of these peak months would influence the housing demand in some shape or form.
So I created another table.
I checked the housing demand using the Office of Policy Development and Research this time.
There, I could find data about the number of homes sold, which indicates demand.
So my question was if there is some link or, in better terms, a correlation between the housing supply and the demand.
Ideally, I would find out that after a certain number of months, houses entering the market will be followed by increased demand.
So, I first collected this demand data in the table below.
|Year||Month With Highest Demand|
And then, I counted the months to find out the frequency over the period between 2010 and 2020.
What did I find out?
The month with the highest demand (highest number of homes sold) during this time was December, followed by July.
To summarize my findings so far:
December and January have the highest housing supply; coincidently, December has also been the month with the highest demand.
What does this mean?
Could an increase in housing inventory sizes influence potential buyers?
I know correlation isn’t the same as causation, but it gives at least a clue about possible causation.
When I put myself in the shoes of a potential buyer, several things would benefit me when going shopping for a home:
- I want as many options as possible to choose from.
- I don’t want bidding wars with other buyers because of a low inventory size.
- I also don’t want to deal with increased housing prices because of a low inventory size.
It’s just a theory, but could potential buyers monitor the market or even know when most houses enter the market to find themselves in the ideal “buying conditions” and then start to follow through with a purchase?
I don’t find that to be too far-fetched.
Some influence between the supply and the closely followed buyer demand seems to exist.
It could be a good study idea for a thesis of a business major.
And why the second peak of demand in July?
I suspect these homes might have entered the market in December or January but didn’t sell within weeks and stayed on the market a bit longer to get purchased by the second wave of buyers taking advantage of the summer holidays.
How Can You Use These Numbers Strategically?
This one is a tougher nut to crack.
Sellers may think they should also put their house on the market in December and January when the demand is the highest.
But the question is if this higher demand isn’t compensated by the higher supply, meaning more competition for sellers.
So maybe we should put supply and demand into relation and create a ratio.
This means that the ideal condition for a seller would be to have basically zero competition but a lot of demand.
We could use a new and simple formula that I came up with (it likely exists in some macroeconomic books already).
Let’s divide whatever number there is for supply by the demand and get a supply-demand ratio.
Whenever this number is lowest would be the ideal month for a seller to sell the house.
I applied this formula to the data I’d already collected in the tables, and the results I got from the further analysis were quite interesting.
When you count the marked sections of the table below and compare it with the total of years, you will come to the following conclusion:
In the past, March was the month with the best supply-demand ratio for sellers (27.27%), closely followed by April, May, and July (18.18% each), and then February and June (9.09% each).
|Year||Month||Supply||Demand (1000s)||Supply-Demand Ratio|
This confirms what I could already find during my research in other sources and articles (although often not backed by data), at least when it comes to the best time to put a home on the market for sellers.
So, you will have the best odds when you start putting it on the market in March. In a strategic context, as previously mentioned, I wouldn’t let myself be influenced by when most houses are put on the market, which is December and January.
As a last perspective, what about buyers? When is the best time to go house hunting, then?
We can use the same formula for the supply-demand ratio. This time, we must look for the highest number or ratio, not the lowest.
Because when this ratio is highest, there is more supply but less demand, which means less buyer competition.
If we take a second look at the table with the ratios, you will find the following:
The supply-demand ratio over the period between 2010 and 2020 was most favorable for buyers in January (27.27%), closely followed by April, May, and July (18.18%), and then February and June (9.09%).
This means that as a potential buyer, you will likely have the most favorable conditions to go house hunting in January.
The Bottom Line
Between 2010 and 2020, in 72.72% of the cases, December and January were the months with the most housing supply in the U.S.
Coincidentally, December has also been the month with the highest demand.
Possibly, some influence or a link exists between the housing supply and buyer demand.
Because the ideal condition for sellers is zero competition but a lot of demand, March is likely the best month to start putting a home on the market.
This is because the supply-demand ratio for sellers is the lowest in this month in 27.27% of the cases.
In contrast, the best time to go house hunting for potential buyers is January, with the highest supply-demand ratio in 27.27% of the cases between 2010 and 2020.
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