Northwest MLS reports "housing market still lacks direction"

A recent report from Northwest Multiple Listing Service revealed that home prices in August experienced a 2.5% increase compared to the previous year. This marks the first year-over-year (YOY) increase since January. The median price for closed sales across 26 counties was $615,000, matching July's figure.

However, other key metrics such as new and active listings, pending sales, and closed sales showed declines in YOY comparisons. There were 8,152 new listings of single-family homes and condominiums added last month, a drop of nearly 17.8% from August 2022. This decrease in new listings was the smallest monthly total since April.

Pending sales in August reached their lowest level since April, with 7,189 reported. This number was down nearly 25% from the previous year's figure of 9,552.

The decline in sales activity is largely attributed to the uptick in mortgage rates. The average interest rate on a 30-year home loan reached 7.23% in August, the highest rate since 2001. Although it subsequently dropped to 7.12% for the week ending September 7, the escalating rates have discouraged both buyers and sellers. Buyers are hesitant to enter the market, while sellers who bought or refinanced homes in recent years are reluctant to swap their lower mortgage rates for higher ones.

Despite the slowdown in activity, supply remains limited, with only 1.71 months of inventory in the MLS database. This is a decrease from both the previous year's supply of 1.84 months and last month's figure of 1.76.

Industry experts predict that over the next two months, home buyers will have the best selection and availability of homes for sale until March 2024. This is due to the reduced number of homes entering the market during the winter months.

Looking ahead, some experts anticipate that home prices will continue to rise after the first of the year, particularly in the more affordable and mid-price ranges. Limited supply is expected to be the driving factor behind these price increases.

Overall, the housing market is described as lacking direction, with conditions influenced by rising interest rates and limited inventory. The market is not expected to see significant changes until mortgage rates start to decrease, assuming that the U.S. economy continues to moderate.

In some counties, high-priced homes have experienced price reductions due to their initial high asking prices. However, the median priced buyer remains active in the market and is able to purchase homes quickly in many cases.

Although inventory remains low in several counties, new listings that are properly priced are attracting multiple offers and often selling for more than the asking price.

Real estate professionals and brokers are hopeful that the traditional fall season increase in listings will provide more options for determined buyers. However, inventory remains a challenge in Kitsap County, where supply is extremely low.

Some homebuyers are turning to new construction, where builders are offering discounts or other incentives to bolster sales. Additionally, the condo segment presents an option with lower prices compared to single-family homes.

Overall, the housing market remains dynamic and influenced by various factors, making it a unique time for buyers, sellers, and industry professionals.