September 2024 Housing Market Update for Western Washington’s Puget Sound Region

The Goelzer Home Team
Published on September 23, 2024

Summary

A headline worth repeating… Interest Rates Continue to Improve!

  • Good News Regarding Mortgage Interest Rates: As of August 29th, mortgage rates were already at their lowest level since March 2023. (6.35% for a 30-year fixed rate mortgage) Expect rates to drop even further due to the September 18th announcement that the Fed’s policy-setting committee is reducing the federal funds rate by 50 basis point or 0.5%. This is a big deal!
  • Still Only 2.3 Months of Inventory: At the current rate of sales, it would take a little over two months to sell every home that is active in the NWMLS inventory. Snohomish (1.41), Kitsap (1.61), Thurston (1.7), King (2.08) and Pierce (2.08) continue to have the lowest months of available homes for sale.
  • Prices Continue to Increase Year-Over-Year: Overall, the median price for residential homes and condominiums sold in August 2024 increased 4.9% when compared to August 2023, rising in 20 of the 26 counties covered by NWMLS.
  • With Lower Interest Rates, Comes Competition: This will be a common theme going forward… As  interest rates continue to fall, more and more buyers will enter the market. The good news… some of these buyers will also be selling their current home, creating additional inventory.

Details

Active listings saw a notable rise with a 34.1% increase year-over-year, totaling 15,453 active properties on the market by the end of August 2024, compared to 11,525 at the same time last year. This increase in homes for sale was widespread, with 25 out of 26 counties experiencing double-digit growth. Leading the way were counties like Douglas (+65.1%), Mason (+49.2%), Lewis (+49%), Pacific (+48%), and Pierce (+43%). As more homes hit the market, it’s essential for buyers to remain aware of the broader economic environment influencing these trends.

This is where the recent Federal Reserve’s 50 basis point rate cut comes into play. While mortgage rates don’t drop directly in tandem with Fed rate cuts, the decision creates favorable conditions that may lead to lower mortgage rates over time. This could be good news for buyers facing rising inventory, as more affordable mortgage options might be available in the near future. As mortgage rates gradually ease, buyers may find increased purchasing power, allowing them to secure better loan terms or qualify for higher amounts, particularly in this market where more homes are listed for sale.

New listings also saw an increase, with NWMLS brokers adding 8,941 new properties in August 2024, a 9.7% rise from last year. Several counties saw particularly sharp increases, with Ferry (+83.3%), Douglas (+45.5%), Pacific (+43.4%), Clallam (+34.7%), and San Juan (+28.1%) leading the charge. This influx of new listings could provide more options for buyers who may have been hesitant to enter the market when choices were limited.

Pending sales grew by 4.7%, reflecting strong buyer demand, particularly in counties like Ferry (+60%), Douglas (+35.1%), and Clallam (+33.8%). Despite the uptick in homes hitting the market, buyer interest remains high, which could lead to more competitive situations for well-priced properties. The key here is that while mortgage rates may not have immediately dropped following the Fed’s decision, the economic environment is becoming more favorable for buyers to lock in better rates.

Closed sales remained virtually unchanged year-over-year, with 6,727 closed sales in August 2024, compared to 6,734 in August 2023. Although there wasn’t a dramatic shift in the number of homes sold, the total dollar value of these transactions increased. For residential homes, the total was $4.92 billion, and for condominiums, $497 million, both representing a 4.7% increase compared to August 2023. This is likely a reflection of higher home prices, which continue to climb as supply remains tight.

The months of inventory metric suggests that while more homes are being listed, the market is still undersupplied. With a little over two months of inventory (2.30) available, we are still far from the 4-6 months that define a balanced market. Areas like Snohomish (1.41), Kitsap (1.61), and Thurston (1.7) are seeing particularly tight conditions.

Despite the increase in listings, the median sales price for residential homes and condos continued to climb, reaching $645,000, a 4.9% increase compared to August 2023. The highest median prices were found in San Juan, King, and Snohomish counties, while Ferry, Adams, and Pacific counties offered more affordable options.

Mortgage rates have already started to show signs of moderation, dropping to 6.35% for 30-year terms by the end of August from the year’s peak of 7.22% in May. According to Steven Bourassa of the Washington Center for Real Estate Research (WCRER), supply constraints will likely continue to impact prices, as permitting for both single-family and multi-family homes dropped off during the period of rising interest rates in 2022. As rates continue to decline, home prices may still rise due to a lack of available housing, underscoring the importance of acting swiftly in a market where supply remains limited.

As always, our real estate team is here to guide you through the complexities of the market. Whether you’re buying or selling, we are ready to help you achieve your real estate goals and navigate the opportunities created by shifting interest rates and market conditions. Let us know how we can help you realize your real estate Wants, Needs, and Dreams.

Information and statistics compiled and reported by the Northwest Multiple Listing Service.

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