The Seattle-area housing market continues to cool off.
More homes are sitting on the market awaiting a buyer. Fewer buyers are signing deals. And prices are dipping faster than usual, as a typical summer slowdown meets higher interest rates, priced-out buyers and economic jitters.
According to new data released Thursday from the Northwest Multiple Listing Service, more than twice as many single-family homes were still for sale across much of the region at the end of July than at the same time last year. The number of condos for sale in King County was up 15.5%.
Median home prices around the region continue to dip. Since May, prices in King County have dropped 11%, or $109,000. During the same span last year, prices were flat.
And while home prices are still up from last year, that growth is slowing down. The median home price in Snohomish County is up 10%. Last July: 22%.
That’s all good news for buyers still in the game. But their budgets are still taking a hit.
The median single-family home sold for $890,000 in King County, $770,000 in Snohomish County and $575,000 in Pierce County last month. Across the water in Kitsap County, the median house sold for $538,000.
The average rate on the 30-year mortgage many buyers need to purchase a home ticked down a bit in late July, but still ended the month 2 percentage points higher than the start of the year. A 1% interest rate hike can cut a buyer’s budget by 10%.
Add that to already high prices — median prices in Snohomish and Pierce counties are up $200,000 or more from 2019 — and buyers are squeezed.
As the market cools off, it would now take nearly two months to sell through all the single-family homes for sale at current demand across the region. The last time inventory was at that level was in late 2018 and early 2019, when the region’s housing market was going through another slowdown.
But “anything under six months is still considered a seller’s market,” said Jed Kliman, a Windermere broker in Greenwood.
Combine all this — prices, sales and how quickly homes fly off the market — and the Seattle area was cooling the fastest of any major housing market in the country in June, according to an analysis by Redfin.
“The stock market and the tech sector in particular has been weighing on all of these metros that have a high concentration of tech workers,” said Redfin deputy chief economist Taylor Marr.
Tacoma ranked No. 10, in part because the area saw fewer price drops than Seattle, Marr said.
Despite the rapid change, Redfin’s economists predict Seattle’s housing market is less vulnerable to a dramatic slide in a recession than many other cities, such as Boise, Idaho, and Phoenix. That ranking relies on 10 measures of price volatility, debt-to-income ratio, flipping, second homes and other factors.
Marr predicts Seattle-area prices will continue to decline this year, though how dramatically depends in part on the rest of the economy.
Kliman, the Windermere agent, predicts homeowners who locked in ultralow interest rates earlier in the pandemic may be hesitant to sell. That would keep a ceiling on inventory and force buyers to continue competing.
Houses Kliman recently listed for sale didn’t draw the 10- or 15-offer bidding wars that became common last year. King County saw nearly 29% fewer pending single-family home sales and 34% fewer condo sales in July than at the same time last year, according to the listing service.
But Kliman said his listings still drew several competing offers each.
“The bidding wars that I’ve seen have not been 20 or 30% over list price recently. They’ve been more like 5 or 10% over,” he said. “That’s a reflection of a more balanced-feeling market.”