New Bright Report Shows Mid-Atlantic Housing Market Hits the Brakes in October
ROCKVILLE, Md., Nov. 11, 2022 /PRNewswire/ -- Home sales were down 29.8% in the Mid-Atlantic in October, as continued fast-rising mortgage rates have priced some home buyers out of the marketplace, while others have taken a "wait-and-see" approach, according to the Bright MLS October Housing Report released today. With inventory still low, the median home price continued to increase in the region, rising 4% year-over-year to $364,000 in October.
"The effects of the sharp and quick increase in interest rates are being felt in full force in the Mid-Atlantic housing market," said Dr. Lisa Sturtevant, Bright MLS Chief Economist. "In most places, we haven't seen prices fall yet, but they will undoubtedly come down from their peak levels. However, because home prices ran up so quickly during the pandemic, in most markets prices will remain higher than they were three years ago."
Washington Metro Area: Pending Sales Retreat to 2007 Levels
Both buyers and sellers have hit pause in the Washington metro area in October. Pending sales in the region were down by more than 40% compared to a year ago. This is the steepest drop off in pending sales activity since December 2007.
Despite the abrupt about-face in the market, home prices continue to rise in most parts of the Washington metro area. The median price rose 2.8% year-over-year, with higher gains in some of the region's suburban markets. However, Washington, DC; Arlington County, Va; and Montgomery County, Md.. saw home prices fall 7.8%, 5.7%, and .09%, respectively, from a year ago.
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.
Although home prices are expected to fall from their peak, values will still be higher than they were three years ago due to how much home values increased during the pandemic.
"The encouraging news for the market, however, is that 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," Sturtevant said.
Baltimore Metro Area: Sluggish Conditions in Local Markets Across the Region
As mortgage rates surpassed 7%, all local markets in the Baltimore metro area have seen a considerable slowdown in home sales activity this fall. The region's suburban markets, which had been more resilient during the late summer, have experienced significant declines in both sales and listings amidst rising rates.
In October, the number of closed sales in the region fell 32.8% compared to last October. This is a bigger yearly decline than there was during the spring of 2020 when the pandemic locked down the housing market. Buyers have either been priced out by higher prices and rates or may be taking a "wait-and-see" approach in the hopes that mortgage rates come down.
Home prices continue to rise though the pace of price growth has slowed considerably. Prices were flat in Baltimore City and dropped by 1% in Howard County.
"Looking ahead, home prices across the Baltimore metro area will drop from their peaks. However, because home prices ran up so quickly during the pandemic, it is likely that prices will remain about where they were three years ago," Sturtevant said.
Philadelphia Metro Area: Housing Market Slowdown Continues, But Prices are Still Rising
As mortgage rates hit 7% in October, the Philadelphia metro area housing market continued to decelerate. Both closed sales and new pending sales were down sharply from a year ago as more buyers are sitting out the market this fall. New listings were down 21.9% in October, indicating sellers are also staying put.
Overall, the month-end inventory climbed by 7.9% year-over-year, but that increase is being driven by a pullback in sales activity and not a surge of new listings. There is still just 1.65 months of supply across the Philadelphia metro area, far below what is needed for a balanced housing market.
Because inventory remains low, prices are still rising. The median home price in the Philadelphia metro area rose 6.9% over last year, the strongest price growth of all the major markets in the Mid-Atlantic.
"It is inevitable that home prices in the Philadelphia metro area will come down from their peaks. However, because home prices ran up so quickly during the pandemic, expect prices to remain above where they were three years ago," Sturtevant said.
Full Mid-Atlantic and Metro area reports are available at BrightMLS.com/MarketInsights
About Bright MLS
Bright MLS was founded in 2016 as a collaboration between 43 visionary associations and two of the nation's most prominent MLSs to transform what an MLS is and what it does, so real estate pros and the people they serve can thrive today and into our data-driven future through an open, clear and competitive housing market for all. Bright is proud to be the source of truth for comprehensive real estate data in the Mid-Atlantic, with market intelligence currently covering six states (Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia) and the District of Columbia. Bright MLS's innovative tool library?both created and curated?provides services and award-winning support to well over 100k real estate professionals, enabling their delivery on the promise of home to over half a million home buyers and sellers monthly. In 2021, Bright subscribers facilitated $141B in real estate transactions through the company's platform. Learn more at BrightMLS.com.
SOURCE Bright MLS
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