Zillow: Spring Home Buying Season Overrated, Buyers Should Wait Until Summer

Why is buying a home like buying a car? Because, says Zillow Inc., Seattle, the best bargains can be found not in the spring, but toward the end of summer.

A new Zillow analysis (https://www.zillow.com/research/strategy-best-time-to-buy-15066/) found for home buyers willing to wait beyond the frantic spring home buying season, patience can pay off. The best time to buy a home is late summer, said Zillow Data Scientist and report author Jamie Anderson, when there are the most options and frequent price cuts.

Key findings of the report:

–Home buyers will find the most inventory and more frequent price cuts in August and September

–Home shoppers will find the most homes for sale in August

–Active listings are more likely to have a price cut in the summer than any other season

–Homes that sell during spring months are more likely to sell above list price

Zillow noted overall inventory of homes for sale is down 5.3 percent from a year ago, signaling another competitive home shopping season for buyers this year. Even in markets that have seen a recent uptick in the number of homes for sale, inventory is still well below the levels of five years ago.

But the report also said more homes come up for sale at the end of summer than at any other time of year, giving buyers the greatest selection. In most major metros, August had more for-sale listings than any other month. In Los Angeles, for example, there were nearly 8,000 more homes for sale in August than in April. In Seattle, the difference was nearly 5,000 listings.

At the same time, price cuts are more common as home sellers start to worry about not selling their homes. Across the country, 15 percent of listings in August have had price reductions. In most large markets, buyers are most likely to find a home with a reduced price tag in either August or September.

“Buyers who start their home search in the spring may still be looking months later–but for those who can wait it out, the end of summer will bring more favorable conditions,” said Zillow Chief Economist Svenja Gudell. “Homes that may have been overpriced earlier in the year are more likely to have a price reduction, and those listings passed over in earlier months may look better with a fresh perspective.”

While spring traditionally kicks off the home shopping season–most new listings hit the market during these months, and April in particular had more new listings than any other month in 2016–shopping in spring is highly competitive, with homes more likely to sell for a premium. Homes listed in late spring sell faster and for a $1,500 premium on average, according to Zillow’s Best Time to List analysis.

“Certainly, if you’re a buyer interested only in finding the most homes listed for sale, spring is the time to shop and make an offer,” the report said. “More new listings hit the market nationwide in April of last year than in any other month, and in almost every large housing market last year, buyers were offered the most new selection in April, May or June. This springtime pattern is even more extreme in markets with harsher winters: In Chicago and Minneapolis, for example, almost twice as many homes are listed in May and June as in December and January. More temperate markets, like Miami and Tampa, have barely any noticeable seasonal pattern at all.”

The report said one in four U.S. homes sell above initial list price in March through May, higher than at any other point in the year, a pattern Zillow said is consistent market to market. By late summer this falls to one in three.

For example: in Dallas, the spring home buying season starts early and continues through July. During those months, the percent of homes selling above list price range from 33.7 percent (July) to nearly 40 percent (April and May). Home buyers who wait until October (21.9 percent) and November (19.9 percent) typically get better deals.

Similarly, well over one-third of homes in Los Angeles sell above list price in March (37.6 percent), April (37.2 percent) and May (37.8 percent), but drop off to 25.8 percent in October and 21.4 percent in November.

One area where it simply doesn’t matter is San Francisco. The best time to buy in The City by the Bay is, apparently, “never,” as nearly half of homes sell above list price even in the slowest month (November) and shoot up to nearly 75 percent in February, March and April.

Conversely, homes in Pittsburgh Pa., tend to sell close to list price regardless of season. While the percentage of homes selling above list price creeps up in spring (up to 16.7 percent in May), prices remain fairly consistent throughout the year. Still, for the best prices, savvy Pittsburghers wait until November, when less than 8 percent of homes sell for more than list price. Other cities with relatively stable home-buying seasons include Chicago, Phoenix and Philadelphia.

However, Zillow noted that while better deals can be reached in late summer and fall, homebuyers have fewer homes to choose from.

“The fierce competition that bites buyers in spring comes full circle and begins to squeeze sellers in the summer,” the report said. “Sellers, wary of the impending return of cold weather, school and all the other factors that annually signal the end of the spring/summer home shopping season, begin to worry about selling their home this season instead of having to re-list and try again next year. The competition with all those other lingering listings leads many sellers to slash prices in late summer and early fall in hopes of finally attracting a buyer. In almost every large market analyzed, the highest share of listings with at least one price reduction were in August and September of last year.”