Rising mortgage rates are not yet slowing home sales in most areas across Washington state, according to brokers who commented on the latest statistical report from Northwest Multiple Listing Service (NMLS).
The report, which documented real estate activity in March, showed a 7.4% year-over-year drop in pending sales, but brokers suggested the decline is likely a reflection of limited supply.
“Typically, by now, we would start to see rising mortgage rates impacting home sales and/or prices,” said Matthew Gardner, chief economist at Windermere Real Estate. “That has yet to happen despite rates rising significantly since the start of the year.”
There have been inventory improvements in “many of the markets along the I-5 corridor,” according to James Young, director of the Washington Center for Real Estate Research at the University of Washington.
Young’s analysis of active listings show robust growth since January in several counties, including Lewis County, which was up 47%, and Thurston County, which was up 42%, according to the news release.
“With rising interest rates and fuel prices, it will be an interesting time for the markets along the I-5 corridor,” said Young. “Increased costs make purchasing a home outside of the urbanized areas a less viable option for first time buyers and others seeking value to move up the housing ladder.”
The latest NMLS report shows brokers statewide added 11,197 new listings of single family homes and condominiums to inventory during March, up from the year-ago total of 10,562. Last month’s total is up from February’s figure of 7,920 for a gain of more than 41%. It also marked the highest volume of new listings added during a month since September 2021 when members added 11,373 listings, according to the news release.
Northwest MLS brokers reported 10,059 pending sales during March across 26 counties.
That’s down from the year-ago figure of 10,863, but compared to February, the volume of pending sales jumped nearly 31%, according to a news release from NMLS.
Nevertheless, with pending sales nearly matching new listings, inventory remained limited system wide. The NMLS report shows only 0.58 months of supply, with King, Pierce, Snohomish and Thurston counties all having less than two weeks of supply.
“When you consider at one time a normal market inventory was four-to-six months, we now consider that measure a relic of times gone by,” said Dick Beeson, managing broker at RE/MAX Northwest Brokers, adding, “We will not see such numbers of homes for sale for possibly a generation or more.”
The supply squeeze is contributing to competition among hopeful homeowners and rising prices, according to the news release.
“We continue to see fierce competition for the available inventory,” stated Frank Leach, broker and owner at RE/MAX Platinum Services. “Buyers have been very frustrated with some writing as many as 15 offers before landing on a home.”
Freddie Mac reported the average rate for a 30-year loan rose to 4.56% last week, with rates climbing at the quickest pace in almost three decades.
Rising mortgage rates have not slowed real estate activity, according to Dean Rebhuhn, owner at Village Homes and Properties. “However, if homes are priced over the market, savvy sellers are making price adjustments,” he said. For now, Rebhuhn said multiple offers “are still the rule. Buyers are making strong offers, pre-inspecting homes, and making sure financing is in place.”
Well-paying jobs and lifestyle needs are driving the market, with some buyers using investments, 401K funds, and family assistance, according to Rebhuhn. He noted Grays Harbor and Ocean Shores offer “good inventory and great values.” Prices in Grays Harbor County surged nearly 25% from a year ago, rising from $280,000 to $349,950, according to the news release.
“The market is following the normal seasonality of spring,” according to J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “This season brings more resale listings coming on the market.”
NMLS is a not-for-profit, member-owned organization that facilitates cooperation among its member real estate firms. Based in Kirkland, Washington, its service area spans 26 counties, and it operates 21 local service centers. More information can be found at www.nwmls.com.
