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FairfaxReal EstateRegional home prices still up, but pace is slowing

Regional home prices still up, but pace is slowing

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Median sales prices continue to inch up across the Washington metropolitan area, albeit more slowly, even as overall home sales continue to tumble significantly, based on new October sales data.

With more slowing likely to come.

“During the last two months of the year, home-sales activity will continue to hit new lows in the Washington area, as buyers and sellers put off any discretionary moves, holding out hope that interest rates come down after the first of the year,” said Lisa Sturtevant, chief economist for Bright MLS, the region’s multiple-listing service, parsing the sales data and crystal-balling into the near future.

A total of 4,069 homes went to closing across the region in November, down 35.6 percent from a year before, according to figures reported Nov. 11 by BrightMLS and analyzed by the Sun Gazette.

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Totals include sales in the District of Columbia; Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church in Virginia; and Montgomery, Prince George’s and Frederick counties in Maryland.

The continued increase in median sales prices – rising 2.8 percent year-over-year to stand at $550,000 in October – could be attributed largely to many buyers opting to sit out the market as sellers. The result was a still relatively low inventory (just a 1.4-month supply of homes to end the month) that has propped up prices.

But to every thing there is a season, and the season of continual price increases may be coming to an end.

Home prices “are expected to fall from their peak,” Sturtevant acknowledged. “In most places, we haven’t seen prices fall yet, but they will undoubtedly come down.”

She expects the declines to be modest, not precipitous, at least in the local area.

“The underlying economic and demographic fundamentals in the Washington area are strong, and the region’s housing market should fare better than others if the national economy goes into a recession in 2023,” she said.

(For those keeping track, the median sales price locally is more than 20 percent higher than at the start of the pandemic.)

Median sales prices for October were up in all local jurisdictions except for Montgomery County (off 0.9%), Arlington (down 5.7%) and the District of Columbia (off 7.8%). In the latter two jurisdictions, however, part of the decline could be attributed to a smaller percentage of single-family homes in the overall sales mix, compared to townhouses and particularly condominiums.

The total number of consummated sales in October was the lowest across the region since January 2020, and marks the 13th out of the past 14 months in which total sales were down from the same month the year before. Sales among the various jurisdictions within the Washington area were all down, and relatively uniformly, with the dropoffs ranging from 23.5 percent to 48.5 percent – the two extremes coming in the cities of Falls Church and Fairfax, which have smaller markets and therefore often wider swings in monthly sales and price data than larger localities.

October’s inventory (7,976 properties on the market regionally) was up by about 4 percent from a year before. That’s one of just three months – the others being June and July of this year – since the start of 2018 when inventory rose from the year before.

But for owners of single-family homes hoping to get top dollar even during the cooler-in-more-ways-than-one winter homes-sales season, there could be a worrying trend, as the number of single-family homes on the market at the end of October was up nearly 26 percent from a year before.

With fewer buyers and more available single-family homes, sellers may need to adjust their expectations of a quick, easy and lucrative sale, or instead opt to wait out the current market in hopes of a more robust springtime.

Figures represent most, but not all, home sales during the period; all October 2022 figures are preliminary and are subject to revision.

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