It's still a miserable year to be selling a house. In May, for example, U.S. house prices fell by 0.4 percent, according to the Office of Federal Housing Enterprise Oversight Index. (The raw data are here.)
Except: They didn't. House prices actually rose in May, albeit very slightly, according to exactly the same source.
Why the difference? The first number is the result of "seasonal adjustment," an attempt to strip out predictable calendar patterns and report just the underlying trend. House prices usually surge in May, and this May the surge was so limp that after seasonal adjustment, it was a fall.
House-price indices are presented in seasonally adjusted form by researchers and reported that way by the media. That makes some sense. For anyone trying to understand the big picture, predictable seasonal gyrations just get in the way.
But for anyone trying to buy or sell a house, predictable seasonal gyrations can't be ignored. Nobody pays a seasonally adjusted price. If you spend $500,000 on a house in a typical February, you might expect to have paid $515,000 had you waited until August. That $15,000 is money in your pocket, seasons or no seasons.
That raises a fairly big question. If house prices systematically surge in summer and stagnate in winter—and they do, in Belgium, France, the United States, and especially the United Kingdom—then why do so many people buy in summer? Why don't we make more of an effort to buy earlier or to wait a few months until the market cools again?
It's true that summer is a convenient time to buy a house. It is the season of weddings and the time when families prepare to send their children to new schools. These are two popular reasons for moving home. House-hunting is nicer in the sunshine, too. But surely these conveniences aren't worth tens of thousands of dollars.
Another possibility is that summer house buyers save on expensive summer rents or that mortgage finance is cheaper. But no: Neither rents nor mortgages fluctuate with the seasons.
A new research paper—still at a preliminary stage—by L. Rachel Ngai and Silvana Tenreyro of the London School of Economics, offers a solution to the puzzle.
Start with the observation that, unlike a car or a laptop or a share in Coca-Cola, every house is a little different. Any particular house may match a family's needs awkwardly or perfectly. Finding out just how well a given house suits you is also a costly and time-consuming business.