The Seattle-area housing market is cooling.
More homes are sitting on the market waiting for buyers. Fewer buyers are signing contracts. And prices are falling faster than usual, as a typical summer slump meets higher interest rates, priced-out buyers and economic conundrums.
More than twice as many single-family homes were still for sale in most parts of the region as of the end of July compared to the same period last year, according to new data released Thursday from the Northwest Multiple Listing Service. The number of condos for sale in King County rose 15.5%.
Median home prices continue to decline around the region. Since May, prices in King County have dropped 11% or $109,000. Prices were flat at the same time last year.
And while home prices are still up from last year, that growth is slowing. Median home prices in Snohomish County rose 10%. Last July: 22%.
This game is still all good news for buyers. But their budget is 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. Across the water in Kitsap County, the median home sold for $538,000.
The average rate on a 30-year mortgage many buyers need to buy a home fell slightly in late July, but still ended the month 2 percentage points higher than at the start of the year. A 1% increase in interest rates can reduce a buyer’s budget by 10%
Add that to already high prices — median prices in Snohomish and Pierce counties rose $200,000 or more since 2019 — and buyers are under pressure.
As the market cools, it will now take about two months to sell through all of the single family homes in 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 recession.
But “anything less than six months is still considered a seller’s market,” said Jade Kliman, a Windermere broker at Greenwood.
Put it all together — prices, sales and how quickly homes fly off the market — and the Seattle area cooled the fastest of any major housing market in the country in June, according to Redfin’s analysis.
“The stock market and the tech sector in particular are weighing on all these meters that have a high concentration of tech workers,” said Taylor Marr, deputy chief economist at Redfin.
Tacoma ranked No. 10, in part because the region experienced less price declines than Seattle, Marr said.
Despite the rapid changes, Redfin economists predict that 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 Depends on 10 measures of price volatility, debt-to-income ratio, flipping, second homes and other factors.
Marr predicts that Seattle-area prices will continue to decline this year, though how dramatically it depends on the rest of the economy.
Kleeman, the Windermere agent, predicted that homeowners who locked in ultra-low interest rates before the pandemic may be hesitant to sell. This will keep a limit on inventory and force buyers to continue to compete.
House Kliman recently listed for sale has not drawn the 10- or 15-offer bidding wars that have become common in the past year. King County saw about 29% fewer pending single-family home sales and 34% fewer condo sales in July than the same period last year, according to the listing service.
But Kliman said he still has several competing offers on his list.
“The bidding wars I’ve seen recently haven’t been more than 20 or 30% of the list price. They have been 5 or 10% higher,” he said. “It’s a reflection of a more balanced-feeling market.”