It almost feels like a tease when Utah gets a feel of warmer weather during the winter months, especially when the Old Farmer’s Almanac predicted a “white out” winter this season.
The weather’s unpredictability can significantly impact the housing market and even lead to market volatility, putting a dent in sellers’ and buyers’ plans going into 2024. Heading into the second month of the year, people are more optimistic about housing rates compared to last year.
“Although affordability continues to impact homeownership, the combination of a solid economy, strong demographics and lower mortgage rates are setting the stage for a more robust housing market,” according to Freddie Mac, which reported the average 30-year fixed mortgage rate this week to be at 6.63%.
Although promising, the reduction in mortgage rates expected by experts this year may not be enough of a difference to curve housing affordability.
Housing experts on weather and the market
Influencing both the behavior of buyers and sellers and the overall market dynamics, weather indeed plays a role, and winter weather has historically been shown to temper buyer demand and listings.
“We expected both buyers and sellers to react more strongly to last month’s drop in mortgage rates once the holidays passed, but frigid weather and snowstorms have halted a lot of buying and selling plans,” Redfin economic research lead Chen Zhao said, per Redfin. “As long as rates don’t shoot up, we expect the market to pick up as the spring season approaches.”
In January, many states saw freezing temperatures. “More than 93 million people across the U.S. were under windchill advisories as low temperatures stretched across the South,” The Wall Street Journal reported.
“‘You can typically expect a certain level of housing market activity based on where interest rates are,’ Zhao told The WSJ. But when looking at mortgage rates right now versus Redfin’s business metrics and listing engagements, market activity is lower than what Zhao would expect. ‘The main thing that happened is the country got really cold and stormy,’ she said.”
The West takes extra caution in regard to weather
According to a Zillow report, people living in the West are the most inclined to consider climate risk as having a significant or profound effect on their search for a home compared to the rest of the country:
- Percentage of potential buyers who have taken into account climate risk: 90%.
- Percentage of buyers who think the weather is “very/extremely impactful”: 59%.
- Percentage of buyers who think the weather is “not at all/not very impactful”: 20%.
“Climate risks impact where most prospective buyers shop for a home,” Zillow senior population scientist Manny Garcia said, per Zillow. “While all generations juggle trade-offs like budget, floor plans and commute times, younger home shoppers are more likely to face another consideration: They want to know if their home will be safe from rising waters, extreme temperatures and wildfires.”
The best time of year to buy
Is there a best time of year to buy a home? It depends. Some major factors include the local inventory, personal circumstances and current market conditions.
“During spring, inventory is plentiful, but competition among buyers may cause prices to rise,” per Rocket Mortgage. “By contrast, home prices may be lower during winter, but inventory is usually limited. And moving in may be more difficult, depending on the weather.”
“Also, the best time to purchase a home isn’t always when inventory is highest or when prices are the lowest. These are important factors to consider, but broader market conditions and your personal needs also play a significant role,” Rocket Mortgage added.
There are many factors involved when people decide against making a big change like moving homes in the winter, according to Aceable Agent:
- Housing inventory decreases.
- It usually takes homes longer to sell.
- Prices experience a brief and minor decline.
- Families don’t want to move halfway through the school year.
- The holiday season is a busier time of year.