Summary
- Inventory availability is even lower than last month: At the end of February, the MLS report shows only 1.7 months of supply across the 26 counties in the report. While that’s an improvement from a year ago (0.7 months of supply), it is down from January’s total of about 2.5 months. Sellers are simply staying put in their homes.
- High and fluctuating interest rates continue to challenge buyers: Despite the challenges, buyers are finding ways to compete and purchase a home. If now is the right time for you to buy a home, know that there are solutions to reduce your immediate interest rate along with the potential to refinance at a later date should rates drop. You really want to talk with a trusted and experienced mortgage broker early in the process.
- Home prices edged down a bit: The median price system wide on February’s closed sales was $575,000, down 1.7% from the same month a year ago, but up 3.1% from January. Year-over-year sales prices slipped in all but six counties. Median price increased for King County ending at $726,700, Snohomish at $664,975, and Pierce at $519,997.
- Correctly priced homes are selling quickly, often receiving multiple offers: While some sellers are holding out for increased prices, those sellers pricing their homes at market value are finding willing buyers. Sellers need to keep in mind the massive increase in prices over the last few years (approximately 42% in the past three years) and the equity gained over that same period of time are slowing drastically. We could be seeing the ceiling on prices, but this will vary depending on location.
Details
Open house traffic has been brisk around Western Washington, signaling the start of the spring market, suggested brokers at Northwest Multiple Listing Service. They noted softening prices are enticing some would-be buyers, while others remain on the sidelines hoping fluctuating mortgage rates will stabilize or decline.
Newly released statistics from the MLS for February show upticks in new listings, pending sales, closed sales, and median prices compared to January, but when compared to the same month a year ago, figures for those metrics declined:
- Brokers added 5,231 new listings of single family homes and condos to inventory last month, about one-third fewer than twelve months ago.
- Pending sales declined 19%, from the year-ago total of 7,697 to 6,230.
- Year-over-year (YOY) closed sales dropped 17.3%, from 5,147 to 4,258 transactions.
- Median prices slipped 1.7% areawide, from $585,000 to $575,000.
Both inventory and interest rates are worrisome for some buyers, according to spokespersons with the multiple listing service.
At the end of February, the MLS report shows only 1.7 months of supply across the 26 counties in the report. While that’s an improvement from a year ago when there was only about 0.7 months of supply (about three weeks), it is down from January’s total of about 2.5 months. A supply of four-to-six months is considered a balanced market, according to the National Association of Realtors and other industry watchers.
The addition of 5,231 new listings during February was around 300 more than January, but down from the year-ago volume of 7,920 new listings. Last month’s additions brought the number of total active listings at month end to 7,234, more than twice the number of a year ago (3,461). However, compared with January, the selection shrunk by nearly 1,000 listings.
Last month, 6,230 buyers were successful in having their offers accepted by sellers. That number of pending sales was a drop of about 19% from the year-ago volume (7,697) but up nearly 7.9% from January’s total of 5,776 sales. Only five of the 26 counties in the report had year-over-year gains in pending sales (Adams, Columbia, Jefferson, San Juan, and Walla Walla).
Closed sales numbers for February had a similar pattern as pending sales. Brokers reported 4,258 completed transactions, a drop of about 17.3% from the same month a year ago. Compared to January, brokers reported 994 more closings for a gain of more than 30%.
The median price systemwide on February’s closed sales was $575,000, down 1.7% from the same month a year ago, but up 3.1% from January. Year-over-year sales prices slipped in all but six counties. YOY asking prices were unchanged areawide, at $650,000, but vary widely by area.
NWMLS data for the tri-county area (King, Pierce, and Snohomish counties), where about half the current inventory is located, shows more than seven of every 10 listings (71.6%) have asking prices of $600,000 or more, with nearly a third of those (31.6%) priced at $1 million or higher.
Commenting on the slowdown in home prices, Lawrence Yun, chief economist at the National Association of Realtors®, called it “welcomed, particularly as the typical home price has risen 42% in the past three years.”
Gardner agreed. “There are homeowners who are choosing not to sell so they don’t lose the historically low interest rate they have on their current mortgage.” Fluctuating rates likely contributed to recent sales activity, suggested Gardner. “What is interesting is that home prices rose between January and February which tells me that buyers jumped on the opportunity to take advantage of mortgage rates that dipped below 6.1% five times between mid-January end early February.”
Interest rates continue to climb upwards, according to Freddie Mac. Buyers could expect to pay 6.65% for a 30-year fixed rate mortgage, up 0.15% from ten days ago and up 2.89% from a year ago. “Lower mortgage rates back in January brought buyers back into the market. Now that rates are moving up, affordability is hindered, making it difficult for potential buyers to act, particularly for repeat buyers with existing mortgages at less than half of current rates,” stated Sam Khater, Freddie Mac’s chief economist.
Northwest MLS figures show there are 175 active listings of new construction homes and condos in Kitsap County, up from only 57 a year ago. Asking prices are similar — $644,950 for last month’s active listings versus $648,990 for the year-ago selection.
All cities within Kitsap County are continuing to see growth and new permit requests, according to Leach. “People building custom homes will be the next wave as land sales and showings have had a spurt of activity.”
Brokers seem to have little concern about last month’s modest YOY price drop. December also had a slight decline from 2021 (down 0.51%), but a check of NWMLS records show the last time year-to-year prices fell was March 2011 to March 2012.
Brokers also expressed confidence in the luxury market, with about 18% of the homes and condos that sold last month in the King-Pierce-Snohomish region commanding at least $1 million.
This is definitely a transitioning market. Whether buying, selling, or investing in real estate, be sure to utilize the expertise, talent, and professionalism of our trusted real estate team. Let us know how we can help you achieve your real estate Want’s, Need’s, and Dream’s.
Data
*Information and statistics compiled and reported by the Northwest Multiple Listing Service.
