Spring home sellers looking to maximize their sale price may want to wait it out and list their home for sale in the first half of June, according to an update from real estate firm Zillow (Nasdaq: Z and ZG).
A new Zillow analysis of the property market / real estate sector 2023 sales found “that homes listed in the first two weeks of June sold for 2.3% more, a $7,700 boost on a typical U.S. home.”
The best time to list consistently had “been early May in the years leading up to the pandemic.”
The shift to June suggests mortgage rates “are strongly influencing demand on top of the usual seasonality that brings buyers to the market in the spring.”
This home-shopping season is poised to “follow a similar pattern as that in 2023, with the potential for a second wave if the Federal Reserve lowers interest rates midyear or later.”
The sale price premium registered last June “followed the first spring in more than 15 years with mortgage rates over 6% on a 30-year fixed-rate loan.”
The high rates put home buyers on the back foot, and “as rates continued upward through May, those prospective buyers were reassessing and less likely to bid boldly.”
In June, however, rates had reportedly “pulled back a little from 6.79% to 6.67%, which likely presented an opportunity for determined buyers heading into summer. More buyers understood their market position and could afford to transact, boosting competition and sale prices.”
Zillow Chief Economist Skylar Olsen, said:
“The old logic was that sellers could earn a premium by listing in late spring when their home would be on the top of the pile of listings when search activity was at its peak. Now, with persistently low inventory, mortgage rate fluctuations make their own seasonality. First-time home buyers who are on the edge of qualifying for a home loan may dip in and out of the market, depending on what’s happening with rates. It is almost certain the Federal Reserve will push back any interest-rate cuts to mid-2024 at the earliest. If mortgage rates follow, that could bring another surge of buyers later this year.”
Mortgage rates have been “impacting affordability and sale prices since they began rising rapidly two years ago.”
In 2022, sellers nationwide saw “the highest sale premium when they listed their home in late March, right before rates barreled past 5% and continued climbing.”
Zillow’s research finds the best time “to list can vary widely by metropolitan area. In 2023, it was as early as the second half of February in San Francisco, and as late as the first half of July in New York. Thirty of the top 35 largest metro areas saw for-sale listings command the highest sale prices between May and early July last year.”
Zillow also found a wide range in “the sale price premiums associated with homes listed during those peak periods.”
At the hottest time of the year in San Jose, homes sold “for 5.5% more, a $88,000 boost on a typical home. Meanwhile, homes in San Antonio sold for 1.9% more during that same time period.”