sellers

Good news! The national economy is growing. Unemployment remains low. Corporate revenues are up.

For housing and mortgage professionals, however, these apparent highlights are persistent nuisances. They signal that the economy is still running hot – or at least more than lukewarm – and inflation may need more cold water from the Federal Reserve to cool it off.

“Cold water” comes from the central bank’s intent to maintain high financing costs for banks that borrow from other financial institutions. In turn, consumers experience the trickle-down effect in the form of costlier lending rates when holding credit card debt or purchasing cars and homes. (More on this in a moment.)

Mixed economic numbers have turned that smile upside down among interest-rate watchers, as inflation persists and employment stays healthy. This divergence of data put the mortgage market on its heels over the past several weeks and essentially reset rates after trending lower in December and January.

As a result, home buyers and sellers across Seattle/King County saw a mixed bag of activity in February, according to the Northwest Multiple Listing Service (MLS). Home sales figures were little changed in the county as a whole year-on-year (YoY) but varied widely by city, while home prices reached double digits amid growing demand.

This return of buyers follows a sluggish late 2023. About two-thirds of all King County listings sold last month at the list price or above, signaling a competitive environment and extending this long-running sellers’ market.

The Seattle/King County housing market appears to have come through the worst of times with a slightly stronger showing in January than in previous months. The number of newly listed homes more than doubled from December and increased moderately compared with the same time last year, according to data from the Northwest Multiple Listing Service. Total inventory remains low, however, keeping prices higher on an annual basis.

The final months of 2023 were among the quietest periods in recent memory for residential real estate amid a slow year overall. Total annual sales across King County totaled 21,515 homes – down an incredible 24% from the year before and the fewest since 2010 (20,761). The market is now in the process of thawing after a lengthy cool down, as buyers begin anew to seek change in their home dynamics.

The Federal Reserve played the role of Santa Claus and delivered an unexpected present just before Christmas in the form of a forecast for lower interest rates in 2024.

This should have sparked the fading embers of an otherwise chilly housing market in Seattle/King County in the final days of 2023. Perhaps too late in the year to make a difference to many, at least the Fed’s upbeat forecast offers renewed hope for the pent-up pool of prospective buyers – possibly sellers, too – to seek out a new home in the coming 12 months.

Before we look ahead, let’s take a quick glimpse at the final numbers from 2023, courtesy of the Northwest Multiple Listing Service. December’s housing activity in King County was marked by shriveling supply amid fewer listings hitting the market in what is traditionally a low point of the real estate year. Prices mostly fell from the previous month but were higher year-on-year.

The Seattle area housing market right now reads like a mystery novel with half the pages missing. So far, the narrative has included a mix of suspense, a hint of optimism and a whole lot of uncertainty.

The year in residential real estate nears its end amid twists and turns like a good book but it’s waiting for the storyline to improve as we fill out the empty pages in 2024.

Suspense has centered on the Federal Reserve and its decision to raise, maintain or lower its short-term interest rate. The optimism comes from signals in economic data that show improving conditions and a likely end to rising mortgage rates in the coming months – a story that we are all looking forward to reading.