Housing Market Trends
Home prices tie record high and high home prices are sidelining some buyers. The median sold price in the Washington D.C. metro area was $640,000 in May, up 6.7% from a year ago and tying the record high set in April.
Prices continue to rise despite the significant uptick in inventory. At the end of May, there were 7,353 active listings throughout the Washington D.C. metro area, which was a 32.0% increase from a year ago. Average prices continue to trend slightly higher than those from 2023.
While supply is increasing, more buyers are being kept out of the market by high home prices and elevated mortgage rates. In May, there were 5,121 closed sales, which was 2.2% lower than last year. The number of new pending sales was down 6.4% year over year.
Half of all homes sold in May were on the market six days or less, which indicates that market conditions are still brisk.
Market Outlook
The sustained low number of new listings relative to demand is the primary reason home prices continue to rise, especially in the case of single family homes.
Where are prices going? As long as supply remains low relative to demand, upward pressure on prices will continue. The gridlock in inventory will likely continue until mortgage rates decline enough to incentivize US homeowners with <4% mortgages to put their properties on the market (many experts suggest 5.5% as the magic threshold). However, a substantial reduction in mortgage rates will likely result in increased demand for still-limited housing inventory, adding additional upward pressure on prices. The answer? If you plan to hold a property for 5-10 years or more, buying real estate today is better than waiting until later. If you want to sell your home, sellers have a lot of leverage in the current market.
Fannie Mae revised their mortgage rate forecast yet again, predicting that average 30-year fixed mortgage rates will delcine from now (Summer 2024) continually through 2025. (see chart below). Earlier in the year, Fannie Mae had predicted average mortgage rates to be below 6.0% by the end of 2024.
