Every year during the second and third quarters (the "hot season") housing markets in the UK and the US experience systematic above-trend increases in both prices and transactions. During the fourth and first quarters (the "cold season"), house prices and transactions fall below trend. We propose a search-and-matching framework that sheds new light on the mechanisms governing housing market fluctuations. The model has a "thick-market" effect that can generate substantial differences in the

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... e of transactions and prices across seasons, with the extent of seasonality in prices depending crucially on the bargaining power of sellers. The model can quantitatively mimic the seasonal fluctuations in transactions and prices observed in the UK and the US. the contributions cited therein. 2 Since we use "constant quality" house price indexes, changes in prices are not driven by changes in the characteristics of the houses transacted. 3 Studies on housing markets have typically glossed over the issue of seasonality. There are a few exceptions, albeit they have been confined to only one aspect of seasonality (e.g., either quantities or prices) or to a relatively small geographical area. In particular, Goodman (1993) documents pronounced seasonality in moving patterns in the US,