Seasonal Fluctuations in the Price of Existing Single Family Houses PDF Download

Author: Kenneth Randol McGurn
Publisher:
ISBN:
Category : Housing
Languages : en
Pages : 188

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Book Description
The major objective of this study was to identify price changes in the existing single-family house market which occur in predictable seasonal patterns. National monthly sale prices from the NATIONAL ASSOCIATION OF REALTORS® were used to construct a monthly index which can be used to seasonally adjust existing single- family home prices. Changes in the total number of sales were observed from 1968 through 1978. The pattern of volume changes indicated a strong market demand in the summer with sales falling 30 to 50 percent during the winter, suggesting a sharp seasonal drop in demand. The "average" monthly sale price was adjusted for inflation using the Housing Price Index. This adjustment left three patterns: a business cycle, a general upward trend in prices, and a strong seasonal pattern. The seasonal price pattern appeared to begin at a low point in the winter months, increasing through the spring to reach a peak during the summer. The prices then dropped through September back to the low winter level. The pattern was reasonably consistent from month to month making a monthly seasonal index practical. The first step was to use a seasonal year of September through August to reduce the effects of the business cycle. Next, the average monthly price for each year was divided by the observed monthly prices for that year. This produced 12 indexes for each of the 12 months in each year. Each index for a specific month was averaged with the same month's index in the other years, to arrive at the monthly index which best fitted the total test period. Observations of the application of the index to the national data, and Multiple Listing Service (MLS) data from Gainesville, Florida, and Charlotte, North Carolina, were made with a high percentage of reductions in the monthly variance from the average. Confidence intervals were calculated to determine the goodness of the estimated monthly index. The interval appeared to be of a small enough size to accept the index as representative of the true seasonal index. Several examples of the application of the index to the appraisal process are provided, with resulting improvements in standard comparable sales appraisals of approximately 400 percent. Several other applications of the index are discussed as well as obvious improvements which are expected for the index as a next step in the research.