Applying Seasonal Adjustments to Housing Markets

William M. Doerner
Federal Housing Finance Agency

Wenzhen Lin
Syracuse University

House price seasonality has been increasing over the last decade, but adjustments have remained largely unchanged in commonly used public data. This report shows how seasonal adjustments work—both theoretically and applied to observed transactions—when constructing house price indices (HPIs). In this report, the authors 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 differences between adjusted and non-adjusted HPIs.

Using the Federal Housing Finance Agency’s (FHFA’s) entire suite of public indices, the authors update adjustments provided by FHFA and offer new adjustments for more than 400 metropolitan areas and other geographies, which haven’t been provided before. They find the difference between previous and updated adjusted indices are relatively small, with slight improvement in recent years.