Seasonal cycles in a model of the housing market

•The US housing market goes through seasonal boom and bust cycles.•In summers prices rise and trade speeds up, in winters prices fall yet it takes much longer to sell.•Cycles are repetitive, hence difficult to explain with frictionless asset-pricing models.•We present a search model based on the premise that the market is thick in summers and thin in winters.•Unlike previous attempts in the literature, the model generates deterministic cycles.

The US housing market exhibits seasonal boom and bust cycles where prices and the speed of trade (turnover rate) rise in summers and fall in winters. We present a search model that analytically generates the observed cycles. The proposed mechanism is based on swings in market thickness rather than market tightness, the leading explanation in the literature.