Typically, after Thanksgiving, the housing market slows down for the holiday season. This is always the slowest time of the year for real estate. This annual trend is marked by a significant drop in activity as buyers and sellers temporarily pause their plans to focus on holiday festivities. If you’re planning to buy or sell a home, understanding the seasonal dynamics of the housing market can help you navigate the unique challenges and opportunities of this time of year.
What Happens to Inventory During the Holidays?
The first seasonal trend that leads to the housing market slowdown is that real estate inventory experiences a predictable dip. Fewer homeowners are willing to list their properties during the busiest time of the year. This year is no exception, with active listings expected to follow historical trends. For example, in 2023, San Bernardino County housing inventory peaked in November and began to decline, leading into December. Historically, inventory drops by 17-18% between late November and early January.
December also sees the fewest new homes enter the market, with 55% fewer listings compared to May, the peak month. November follows closely with 34% fewer new listings than May. Finally, many sellers pull their homes off the market if they don’t secure a sale before the holidays.
In 2022, nearly 1,883 homes were removed from the market during November and December.
A Dip In Housing Demand During the Holidays
Just as sellers retreat from the market, many buyers also hit pause on their home search during the holidays. Buyers often prioritize family time, travel, and holiday preparations over house hunting. Additionally, limited inventory reduces the options available, discouraging some buyers from continuing their search during this time. In fact, last year, buyer demand in San Bernardino County dropped 16% from November to early January. Meanwhile, pre-pandemic averages saw even steeper declines, with demand decreasing by 30% during the holiday season.
Steady Expected Market Time Regardless
Despite these seasonal fluctuations in housing inventory and demand, the Expected Market Time, or the time it takes to sell a home based on current supply and demand, remains relatively stable. This relative stability is due to parallel drops in both inventory and demand. This wasn't always the case. Pre-pandemic, Expected Market Time grew substantially. However, post-pandemic historical trends predict continued stability in Expected Market Time to finish the year.
Pre-Pandemic Trends:
- Before COVID, the Expected Market Time in San Bernardino grew more significantly during the holidays, with an average increase of 16 days.
Post-Pandemic Stability:
- Since 2020, market time has shifted by only a few days during the holiday season as supply and demand decrease at similar rates.
What This Means for Buyers and Sellers
If you’re considering entering the housing market during the holidays, there are some key takeaways to keep in mind. Sellers should expect fewer showings and offers during this period. At the same time, they should be prepared for some competition as unsold homes from earlier in the year remain on the market. In the end, if a home doesn’t sell at this time, sellers can consider waiting until the New Year to relist.
Likewise, buyers should be patient. There are, naturally, fewer houses to choose from now, but housing inventory levels tend to increase after the end of the holiday season. Alternatively, serious sellers may be more motivated to negotiate during this time if you are currently looking at a property. In the meantime, work with your real estate agent to stay updated on new listings that meet your criteria.
What to Expect After the Holiday Season
As we hunker down during the holiday season, it’s important to remember that the housing market operates on its own cycle. While this time of year brings a predictable, temporary slowdown, these trends set the stage for renewed housing market activity in the New Year. Ahead of the market upturn, prospective sellers can use this time to ensure their property looks best in the buyer's eyes once demand warms up again. Our helpful Seller's Checklist outlines all of the steps to get your property ready. Whether you’re buying, selling, or simply planning ahead, understanding seasonal trends in the housing market can help you make informed decisions during this festive yet quieter time for real estate.