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Applying Seasonal Adjustments to Housing Markets

Author

Listed:
  • William M. Doerner

    (Federal Housing Finance Agency)

  • Wenzhen Lin

    (Syracuse University)

Abstract

House price seasonality has been increasing over the last decade, but adjustments have remained largely unchanged in commonly used public data. This paper shows how seasonal adjustments work -- both theoretically and applied to observed transactions -- when constructing house price indices (HPI). In this paper, we find the seasonality in the housing market is not uniform across geographies. Evidence is provided about where adjustments are more necessary, how often they should be recalculated, and how the weather-related variables, social and industry characteristics impact difference between adjusted and non-adjusted HPI. Using the Federal Housing Finance Agency (FHFA)'s entire suite of public indices, we update adjustments that have been provided by the FHFA and offer new adjustments for over 400 metropolitan areas and other geographies, which haven't been provided before. We find the difference between previous and updated adjusted indices are relatively small, with slightly improvement in recent years.

Suggested Citation

  • William M. Doerner & Wenzhen Lin, 2022. "Applying Seasonal Adjustments to Housing Markets," FHFA Staff Working Papers 22-03, Federal Housing Finance Agency.
    • Handle: RePEc:hfa:wpaper:22-03
    as

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    File URL: https://www.huduser.gov/portal/periodicals/cityscape/vol24num3/ch4.pdf
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    References listed on IDEAS

    as
    1. Barend Abeln & Jan P. A. M. Jacobs, 2023. "COVID-19 and Seasonal Adjustment," SpringerBriefs in Economics, in: Seasonal Adjustment Without Revisions, chapter 0, pages 53-61, Springer.
    2. L. Rachel Ngai & Silvana Tenreyro, 2014. "Hot and Cold Seasons in the Housing Market," American Economic Review, American Economic Association, vol. 104(12), pages 3991-4026, December.
    3. Reichert, Alan K, 1990. "The Impact of Interest Rates, Income, and Employment upon Regional Housing Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 3(4), pages 373-391, December.
    4. Kaplanski, Guy & Levy, Haim, 2012. "Real estate prices: An international study of seasonality's sentiment effect," Journal of Empirical Finance, Elsevier, vol. 19(1), pages 123-146.
    5. Bógalo, Juan & Llada, Martín & Poncela, Pilar & Senra, Eva, 2022. "Seasonality in COVID-19 times," Economics Letters, Elsevier, vol. 211(C).
    6. John P. Harding & Stuart S. Rosenthal & C. F. Sirmans, 2003. "Estimating Bargaining Power in the Market for Existing Homes," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 178-188, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    seasonality; house price; real estate valuation; X-13;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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