Interest rates dropped from 7.1% in November to 6.61% in December, signaling improving conditions for buyers in the Northwest region in the new year.

However, according to the latest report from the Northwest Multiple Listing Service, active inventory decreased month over month while home prices edged up 5% year over year, with CoreLogic predicting further appreciation of 3.5% throughout 2024.

“Strong home price gains over the course of the year indicate that home prices in most Washington state markets have fully recovered from 2022 losses and are reaching new highs once again,” said Selma Hepp, chief economist for CoreLogic.

The median sale price increased in 16 of the 26 counties in the Northwest MLS region, with the highest median prices occurring in San Juan County ($1,450,000), King County ($775,000) and Snohomish County ($675,000).

Closings fell 11% year over year, with 4,018 homes sold in December. Condominium sales, however, decreased by only 6%. Pending sales remained stagnant year over year but decreased by nearly 600 sales month over month.

“Washington counties covered by NWMLS have followed seasonal trends in transaction volume and inventory levels, both seeing a typical drop when compared to spring and summer months,” Mason Virant, associate director of the Washington Center for Real Estate Research at the University of Washington, said in the report. “Inventory levels continue to be low as current owners with low-rate mortgages remain reluctant to sell. This has led to a continued decline in year-over-year transaction volume and inventory levels in the market.”

Housing inventory sat at a 1.9-month supply in December, down from 2.3 months in November and 2.1 months in December 2022.