Amid year-over-year declines in Seattle market activity, single-family home prices saw the first annual increase since January last month, according to the latest report from the Northwest Multiple Listing Service (MLS). The average sales price rose 2.5% to $768,865, while the median price remained steady at $615,000 month over month.
Realtors added 8,152 new listings to the MLS in August, down 17.8% from last year. Only 7,189 homes went under contract, marking the lowest level of pending listings since April.
Industry professionals say high mortgage rates are the culprit to blame: The average interest rate on a 30-year mortgage reached 7.23% in August, the highest rate since 2001. The interest rate subsequently dropped to 7.12% during the first week of September.
Active listings were down on a year-over-year basis as well with 11,525 listings available at the end of August, a 21.5% decrease from last year. These constraints left the Northwest region with a 1.71-month supply of inventory, down from 1.76 months in July and 1.84 months in August 2022. And while inventory technically rose in King, Pierce and Snohomish Counties, housing supply is still significantly lower than it was in pre-pandemic years.
“Our traditional real estate cycle going from spring highs into a summer slowdown was in play in August as home buyers and sellers took a break to enjoy the warm weather,” John Deely, executive vice president of operations at Coldwell Banker Bain, said in the report. “Buyers became fatigued searching through low inventory and being hit with the double punch of rising interest rates and median prices. Such conditions have a particular impact on first-time homebuyers and the starter segment of the market as they are the major driver of the increase in the demand for housing.”
Windermere Real Estate Chief Economist Matthew Gardner describes the current market as “lack[ing] direction.” Gardner went on, “It likely won’t find its footing until mortgage rates start to pull back, which I expect to see as we enter the fall months…assuming the U.S. economy continues to moderate.”
“The market is not to everyone’s liking,” added Dick Beeson, managing broker at RE/MAX Northwest, Tacoma | Gig Harbor. “Nearly every market has had large reductions in inventory, which is causing lots of unhappiness. The simple answer for many is that the market needs more existing homesellers to decide to move sooner rather than later, but the reality is that’s not going to happen anytime soon. The market will limp along with low inventory and high rates for the next one or two years.”
Despite decelerated market activity, the sales-to-list price ratio rose to over 100% in Douglas, King, Kitsap, Mason, Pierce, Snohomish and Thurston Counties, meaning the typical home sold over asking price.
“Smart sellers are furnishing home inspections and correcting issues while smart purchasers are presenting offers with a minimum of contingencies and short closing dates,” concluded Dean Rebhuhn, owner at Village Homes and Properties. “Lifestyle decisions continue to drive listing and sales activity.”