Mortgage rate increase throws curveball into market

Published on: January 6, 2025

Northwest MLS, the source for the most current, accurate market listing data in Washington state, today released its Market Snapshot for the month of December 2024.

Market Recap

Despite hopes among potential home buyers and sellers, as well as economists’ predictions, the Federal Reserve Bank’s three interest rate cuts in 2024 have not led to reduced mortgage rates or a significant boost in the housing market. Instead, as of January 2, 2025, mortgage rates have risen to 6.91%, their highest level since July 2024.

“The 30-year mortgage interest rate was actually higher at the end of 2024 (6.85%) than at the end of 2023 (6.61%),” said Steven Bourassa, director of the Washington Center for Real Estate Research (WCRER) at the University of Washington. He anticipates that mortgage rates will continue to frustrate the market. “We may well be experiencing the pains of adjusting to a new normal, with persistent interest rates of 6% or higher.”

Rising rates have been accompanied by a 4.3% increase in home prices over the past year, further exacerbating affordability challenges. However, the market has shown some signs of increased activity. Active listings and sales transactions were up by 25% and 19.8%, respectively, in December 2024 compared to the previous year, suggesting that buyers and sellers may be adjusting to higher borrowing costs.

While affordability remains a significant concern, these trends point to a gradual adaptation to the evolving landscape of the housing market.

December 2024 Key Takeaways

Active Listings

• The number of homes for sale increased 25% year-over-year throughout the NWMLS coverage area, with 21 out of 26 counties seeing a double-digit increase compared to December 2023.
• The five counties with the highest increases in active inventory for sale were Snohomish (+46.1%), Douglas (+43.3%), Cowlitz (40.8%), Grant (+39.9%) and Skagit (+38.2%).

Closed Sales

• There were 4,812 closed sales of residential homes and condominium units, an increase of 19.8% when compared to December 2023 (4,018).
• The total dollar value of closed sales in December 2024 for residential homes was $3,284,574,394 and $409,740,278 for condominiums ($3,694,314,671 in total), an increase of 24.8% when compared to December 2023.

 Median Sales Price

• The median price for residential homes and condominiums increased by 4.3% year-over-year from $597,975 in December 2023 to $623,500 in December 2024. Prices decreased month-over-month by 3.33% when compared to November 2024 ($645,000).
• The three counties with the highest median sale prices were San Juan ($849,500), King ($800,000), and Snohomish ($744,995), and the three counties with the lowest median sale prices were Ferry ($125,000), Adams ($292,300) and Pacific ($320,000).

Consumer and Broker Activity

NWMLS also provided insights into consumer activities during the month of December 2024:

• Keyboxes located at listed properties were accessed 82,655 times in December 2024, a 26% decrease in activity from November 2024 when they were accessed 111,482 times. Keybox activity increased by 3% year-over-year, with keyboxes being accessed 80,117 times in December 2023.
• The total number of property showings scheduled through NWMLS-provided software decreased 25% from 84,997 in November 2024 to 63,610 in December 2024. This was a year-over-year increase of 6% from the number of showings in December 2023 (60,062).
• In December 2024, there were 11,382 listed properties that were eligible for the Down Payment Resource (DPR) program offered by NWMLS, a 17% year-over-year increase from December 2023.