Summary
- The real estate market in the Puget Sound region is returning to more “normal conditions”.
- Inventory (available homes for sale) nearly doubled from this same time last year, and that means more selection for buyers. The current inventory levels across the region are at 1.84 months of supply, down slightly from last month of 2.01 months.
- Pending and closed sales are slowing. Both pending (homes under contract) and closed sales increased month-over-month, but decreased year-over-year, showing signs of a cooling market returning to more normal conditions.
- Prices continue to increase… but more slowly. With additional homes on the market, sellers must present move-in-ready homes and set realistic prices in order to compete for active buyers. Median year-over-year, single-family home prices rose about 4.2%, from $600,000 to $625,000, with condo prices up 3.3%.
- Buyers are back. Buyers who were priced out of the frenzied real estate market over the past few years are now returning due to increased selection, less competition, and continued pressure from increasing rental prices.
Details
Northwest MLS report shows “typical August,” and return to more “normalized conditions”. Reports that we are entering a “bear market” are highly exaggerated, suggests an economist who tracks real estate activity when commenting on the latest statistics from Northwest Multiple Listing Service (NWMLS). A director with the multiple listing service said the latest data may just reflect a typical August, noting activity tends to be slow as summer ends.
In a report summarizing August activity, Northwest MLS figures showed a continued buildup of inventory – nearly double the selection of a year ago and more than three times the offerings at the end of the first quarter.
Brokers added 9,914 new listings to inventory during August, a drop from both July’s total of 11,805 and the year-ago total (11,437). At month end there were 14,683 active listings of single-family homes and condominiums across the 26 counties in the NWMLS report.
Fewer sales were reported than a year ago, but both pending sales (mutually accepted offers) and closed sales improved on July’s figures.
Northwest MLS members reported 9,552 pending sales, a drop of nearly 22% from the year-ago total of 12,238 pendings. Every county except Columbia experienced a decline in pending sales. Activity picked up from July when there were 8,775 pending sales, a gain of nearly 8.9%.
Similarly, the volume of closed sales fell from a year ago. MLS members recorded 7,998 completed transactions, improving 4.6% from July’s total of 7,645. But last month’s closings were down about 24% from the same month a year ago when members notched 10,571 closed sales.
The median price on sales of single-family homes and condos that closed during August was $600,000, up more than 3.6% from a year ago, but down slightly from July when the area-wide price was $625,000.
For single-family homes, year-over-year (YOY) prices rose about 4.2%, from $600,000 to $625,000. Homes in San Juan County registered the steepest jump, climbing from $800,000 to $995,000 (up nearly 24.4%).
A comparison of the four counties in the Puget Sound region shows year-over-year median prices for single-family homes increased from 5.9% in King County to 9.2% in Kitsap County. Within the six sub-areas on the report for King County, North King County notched the largest YOY gain on single-family home prices at 11.5%, followed by the map areas within Seattle (5.9%), Southwest King County (4.1%), the Eastside (about 3.9%), and Southeast King County (nearly 3%). Prices fell 11.3% on Vashon compared to a year ago.
Condo prices system-wide rose 3.3% from twelve months ago. Across all counties, the median price rose from $435,625 to $450,000. In King County, where nearly 60% of condo sales occurred, the median price increased 5.9%, from $458,000 to $485,000.
A check of the sales price to list price ratio shows an area-wide ratio of 99.3%. In three counties – Pierce, Thurston and Douglas – sellers received slightly more than their asking price. In ten other counties, the ratio was between 99.1% and 99.9%.
Economist Gardner expects prices will soften. “Home sales increased month-over-month, but the rise in listings is causing prices to soften,” he remarked, adding, “I predict prices will drop further as we move into the fall, but reports that we are entering a “bear market’ are highly exaggerated. The market is simply reverting to its long-term average as it moves away from the artificial conditions caused by the pandemic.”
Commenting on the uptick in inventory, Gardner said, “Even though inventory in the King, Pierce and Snohomish counties region almost doubled from a year ago, the number of homes for sale is still 14% lower than in August of 2019.”
Despite the surge in inventory, the Northwest MLS report shows there is only 1.84 months of supply – and that’s down from July’s figure of 2.01 months. Only six counties had more than three months of supply: Adams, Ferry, Lewis, Okanogan, Pacific, and San Juan. Most industry analysts consider four to six months of inventory to be a balanced market.
Lawrence Yun, chief economist at the National Association of Realtors®, believes “we may be at or close to the bottom in contract signings” for the current housing cycle. He noted housing affordability plummeted to its lowest level since 1989, in part due to rising mortgage rates and prices, but he expects annual price appreciation to moderate “to the typical rate of 5% by the end of this year and into 2023.”
Continuing the optimistic outlook, Yun stated, “With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”
To better navigate the ever changing real estate market conditions, it’s even more important for you to work with a professional real estate advisor. Whether buying, selling, or investing in real estate, be sure to utilize the talent and expertise of our trusted real estate team, The Goelzer Home Team.
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Data
*Information and statistics compiled and reported by the Northwest Multiple Listing Service.
