December is traditionally the lowest-volume month of the year for real estate closings; however, new home search and purchase data suggests meaningful homebuyer action happens around the winter holidays.
How do the holidays impact home sales?
It’s a well-known and unsurprising fact that December is a low-volume month for home sales. The past three decades of data prove that home sales dip in December each year. The number of business days are greatly reduced as title & escrow businesses, real estate agents, and lenders reduce their work hours or shut down operations altogether for bank-observed holidays.
According to new insights from ATTOM Data Solutions however, December is the most financially-beneficial time of the year for homebuyers to close on a home, bringing forth financially-savvy buyers. The study found that the best 3 days in the calendar year to buy a home were December 24th, December 4th, and December 31st.
While December brings forth savvy homebuyers, the month is still mostly devoid of home sales. Some speculate that weather conditions deter home shoppers from getting out to view available homes; however, the weather theory is largely unfounded for two reasons:
- January and February experience a spike in home sales, despite having similar conditions.
- Home sales are lowest in December, even in regions like the Southwest where the climate is more consistent.
The December slow down is more likely related to holiday travel and business operations halting during the second half of the month.
How do the holidays impact title & escrow business operations?
While these factors make for lower transaction volumes overall, December may just be the busiest month for title & escrow businesses because title & escrow agents must process more transactions per day.
According to a Workforce Institute at Kronos survey, more than 30% of employees planned to take the week between December 25th and January 1st off regardless of their company’s PTO policy. Many employers also offer Christmas Eve as a paid holiday. Depending on the calendar year and where Christmas and New year fall, employees may spend as little as 16 days in the office during the month of December. For title & escrow businesses, this means more transactions must be processed during the 16 days most of their employees are in the office. During the rest of the calendar year, employees spend an average 21.6 days in the office.
When comparing transaction-volume-per-workday in December (assuming 16 working days) versus peak homebuying month (assuming 21.6 working days) each year from 2014-2018, the transaction volume was comparable (or higher) in December than peak homebuying month every year except 2018.
December’s Transaction Volume Per Work Day Is Comparable to Peak Home buying Season
|Year||Homes sold During Peak Home buying Month/ Avg. # of Work Days||Homes sold in December / Avg. # of Work Days|
|Source found here|
Even without high sales, homebuyers are still window shopping in December
While December yields lower transaction volume, online search trends show that buyers are actively researching homes during the winter months.
In the past 3 years, the highest-volume of home sales shifted from the months of May, April, or June to March. This shift may be due to a high number of people searching for homes during the holidays.
As more consumers leverage proptech tools (such as virtual home tours and Zillow’s Zestimate tool) to advance their online searches, the research-to-purchase timeline is getting shorter. According to NAR, consumers’ average timeline between search and sale has gone from 12 weeks in 2013 to 10 weeks in 2018.
According to a 2018 NAR report, 93% of home buyers search online during their home buying process. This figure continues to rise each year—Google Trends data reveals that real estate-related searches grew 253% over the last 4 years.
WHICH MONTHS HAD THE HIGHEST NUMBER OF RESIDENTIAL HOME SALES EACH YEAR?
|Year||Peak Home Buying Month|
|2019* (as of December 18, 2019)||March|
|Source found here|
Equipping your team for high-transaction months
Holiday home sales data is a good reminder that looking solely at closings-per-month may not be the best way to evaluate your business needs and the operational burden your team may experience. Additionally, as peak home buying months fluctuate, it’s important for teams to be equipped for high transaction volume all year long.
Creating a flexible work environment through the use of cloud-based technology gives employees the ability to complete closings remotely, greatly reducing the burden of months when operating days are reduced or when sales pick up.
To learn more about how Qualia’s cloud-based technology helps title & escrow businesses provide employees flexibility while maintaining security, click here.