Market Update — January 2024
We believe timely and relevant data is key to making good decisions. To this end, we are committed to providing our community and clients with actionable data and insights about the local real estate market.
Local real estate market
With the data from December 2023 in, here’s an overview of the key aspects of the local real estate market. The real estate data below is collected from Northwest Multiple Listing Service (NWMLS).
Median price: The chart below shows the latest median sales prices of homes over the past three years in the Greater Seattle area over the past three years:
Homes sold: 4,018 homes were sold in December 2023 with the median price of $597,975, which represents a +4.9% growth YOY. This translates to a dollar value of about $3B.
New construction: 729 new construction homes were sold in December 2023. The median sale price of new construction homes was $700,000, which represents a -5.4% decline YOY.
Months of inventory: At the current rate of sales, it’ll take around 1.9 months for every listed home to sell. This indicates inventory has shrunk by about 9% YOY. To put this number in context, note that the months of inventory for a balanced market is considered to be 4 to 6 months. So the current data point confirms the enduring shortage of supply relative to demand in the area.
New listings: 2,884 new listings were added to the NWMLS database in December 2023. This is a decrease of -3.2% from December 2022, which exacerbates the low supply. This indicates fewer property owners are likely to be interested in selling their homes exacerbating the chronic shortage of supply.
Mortgage rates: The Freddie Mac rate has edged down from it’s high in November 2023 towards 6.7%.
Average 30-Year Fixed Mortgage Rates over the past 12 months (Source: Freddie Mac)
Broader economy
Private Sector Job Growth Beats Expectations: Nela Richardson, chief economist for ADP, noted that “we’re returning to a labor market that’s very much aligned with pre-pandemic hiring.” She also explained that “while wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”
“Annual “Core” Consumer Inflation Falls Below 4%: Inflation has made significant progress lower after peaking in 2022, with the headline reading now at 3.4% (down from 9.1%) and the core reading at 3.9% (down from 6.6%). Remember, the Fed began aggressively hiking the Fed Funds Rate (the overnight borrowing rate for banks) in March 2022 to try to slow the economy and curb runaway inflation. Following eleven hikes in this cycle, the Fed pressed pause at their last three meetings in 2023, as signs of cooling inflation grew. Will the progress we’ve seen on inflation be enough for the Fed to shift from rate hikes to rate cuts later this year, as many economists expect?
