Median prices are still rising due to low inventory and an uptick in market activity; Townhomes lead the way in new contracts and median price growth
Demand has picked back up in the Washington DC metro housing market in October following a typical September slow down. Sales, new pending contracts, and median price gains are all above their 10-year average change from last month, an indication that buyers are still active in the market. All market indicators are above last years levels, and many are at multi-year October highs. The mild temperatures experienced in October could be playing a role as evidenced by a 7-year high for new pending contracts. Buyers appear to be drawn towards townhomes and condo units, as the proportion of new contracts on single-family homes is the lowest it has been in 2 years. This could be due to the lower price points of these properties as well as location preferences of the active buyer market. Median prices are up in the region, posting the highest year-over-year price gain in nearly 7 years.
The inventory of homes for sale continues to fall, which is playing a role in the price gains. Active listings are nearly half of their level 2 years ago, and new listings for October are at their lowest point in over a decade. Townhomes continue to gain traction in the market, posting the highest median price growth and new contract growth of all property segments. Despite the rising prices, it is unlikely that the region will see an influx of active listings as we close out the year. Many would-be sellers are still facing equity losses, and economic uncertainty remains a concern.
Demand appears to be persisting across all property segments, highest October sales in 3 years. There were 3,269 sales in October in the Washington DC Metro Area, a 16.1 percent jump from last October. Sales are steady from last month, up a modest 0.4 percent, which indicates demand could be enduring into the historically slow fall season. The 10-year average change in sales from September to October last month is -3.8 percent. All property segments continue to have higher sales compared to last year. Condos led all segments, up 23.4 percent from last October, a rebound from last month’s slowed growth. Single-family home sales rose 14.2 percent from this time last year, followed by townhome sales at with a 12.6 percent gain.
Median price gains continue for most of the region. Highest year-over-year increase for the DC Metro Area in nearly 7 years. At $362,500, the median home price in the DC Metro Area is 13.3 percent higher than in October 2011. This represents the highest year-over-year increase for any month since December 2005. The low inventory of homes for sale coupled with steady demand continues to push prices upward relative to last year. Prince George’s County leads the way with 20.0 percent growth, an increase of $30,000 to the median price from this time last year. All other jurisdictions within the DC Metro region experienced median price gains with the exception of Falls Church City, however medians there tend to be volatile due to the low quantity of homes sold. Townhomes had the highest median price growth of all property segments, up 14.2 percent from October 2011. Median prices of single-family homes and condos rose 11.8 and 10.2 percent, respectively.
New contracts are at the highest October level in seven years, townhomes lead in growth. There were 4,459 new contracts signed in October in the region, up 5.8 percent from this time last year, and the highest October total in 7 years. New contracts this month are higher than the 10-year average, which could be due to both lingering demand and mild temperatures for much of October. Townhomes led all property segments in new contract growth for the first time in over a year, up 11.4 percent from October 2011, followed by condos, which rose 8.9 percent. The number of new contracts for single-family homes increased a modest 1.3 percent from last October. The proportions of new contracts for single-family homes in September and October are the lowest the region has seen in over 2 years. This likely indicates that market demand is gravitating toward townhomes and condos, which tend to have lower price points.
Active listings are roughly half of what they were in October 2010. New listings for October are the lowest in over a decade. There were 8,766 active listings in the Washington DC Metro Area at the end of October, 37.2 percent lower than this time last year. This is the first time the number of active listings has dropped below 9,000 since July 2005. October active listings in the region are nearly half of what they were 2 years ago, indicating dramatic property absorption in the market. All property segments experienced year-over-year inventory reductions exceeding 40 percent. The 4,588 new listings in the region are the lowest October-level since 1999, an indication of a persisting pattern of low supply. The low inventory of homes for sale is having a direct impact on the median days-on-market, which was 23 days in October, down 21 days from this time last year. Impacts can also be observed with the sale-to-list price ratio, which rose from 93.4 percent in October 2011 to 96.0 percent this month for the metro area.
About the RBI Metro Housing Market Update
The DC Metro Area Housing Market Update provides unique insights into the state of the current housing market by measuring the number of new pending sales, trends by home characteristics, and key indicators through the most recent month compiled directly from Multiple Listing Service (MLS) data in RBI’s proprietary database. The bulk of this report’s content is readily available, down to the ZIP code level of granularity, via interactive charts and reports offered via rbiEXPERT, a premium subscription service offered to real estate professionals interested in growing their business with the help of industry-leading and user-friendly analytics. The DC Metro Area housing market includes: Washington, D.C., Montgomery County and Prince George’s County in Maryland, and Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City in Virginia.
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About the Center for Regional Analysis at George Mason University
The Center for Regional Analysis conducts research and analytical studies on economic, fiscal, demographic, housing, and social and policy issues related to the current and future growth of the Virginia, Maryland, and DC areas. Through its range of research and programs — major economic impact studies, economic forecasts, fiscal analyses, conferences and seminars, publications, information services, and data products — the Center’s activities strengthen decision-making by businesses, governments, and institutions throughout the Greater Washington region. Visit http://cra.gmu.eduto learn more.