Demand keeping inventory in check as buyers compete over low inventory

Published on: July 6, 2023

Brokers with Northwest Multiple Listing Service reported their highest volume of closed sales last month (6,842) since September 2022’s total (7,504) as buyers competed for limited inventory.

The Northwest MLS report summarizing June activity showed there was about six weeks of supply (1.55 months), with twelve of the 26 counties having less than two months of inventory. Among those were King, Kitsap, Pierce and Snohomish counties, where nearly 55% of the inventory is located. Five counties reported having more than four months of supply (Columbia, Ferry, Kittitas, Okanogan, and San Juan).

The latest NWMLS report shows the number of active listings of single family homes and condominiums systemwide is down nearly 21% from June 2022 (10,607 versus 13,405). For single family homes (excluding condos), year-over-year inventory is down about 22.4%, while condo inventory declined 9.2%.

Pending sales for June totaled 7,759. That is a decline from both May’s total of 8,120 (down about 4.4%) and from the year ago total of 8,937 (down about 13.2%).

Last month’s 6,842 closed sales marked the largest number of closings since September, but compared to June 2022 the volume was down about 24%.

“In real estate, it is all about the supply and demand principle,” said J. Lennox Scott, executive officer at John L. Scott Real Estate. “In the current housing market environment, in the more affordable and mid-price ranges where 80% of transactions are occurring, we are observing a virtually sold-out market which has been sending prices higher,” Scott stated.

On a brighter note for buyers, NWMLS members added 9,481 new listings to inventory during June. That’s the highest total since August 2022 when brokers replenished inventory with 9,914 new listings.

“Demand continues to keep the existing and new inventory in check as buyers compete over low inventory, driving the median price for single family homes (excluding condos) in King County to $935,000, and approaching last year’s record of $998,888,” commented John Deely, executive vice president of operations at Coldwell Banker Bain.

Deely noted King County residential properties (single family homes) have had a 19.7% increase in the median sold price year to date (YTD). “San Juan County reported a median sales price of $1,096,000 for last month’s sales – a 14.2% increase from a year ago.” NWMLS statistics show that county’s price for sales of single family homes has surged more than 35% since January.

“Although at a lower velocity than previous years, low inventory and higher interest rates keep the overall market in a more balanced state as sales keep pace with new and existing inventory,” Deely remarked while noting the three most populated counties (King, Pierce and Snohomish) all maintained less than 1.5 months of inventory.

At the end of June, buyers could choose from 10,607 total active listings. Overall, that volume declined about 21% from a year ago. Eleven counties had year-over-year gains in inventory, led by Kittitas (up 45%) and Jefferson (up more than 37%).

“We have multiple open houses with many visitors every weekend,” stated JoAnna Harrison, a member of the NWMLS board of directors, commenting on activity in Chelan County, which was one of the counties that notched a year-over-year increase in total active listings, at 17%.

“Chelan County is seeing an increase in seller activity coming from the Leavenworth area due to the recent restrictions on short-term rentals.” (In May, Chelan County said no new applications for short-term rentals would be taken for the 98826 zip code area, encompassing Leavenworth, Plain and Lake Wenatchee, during the current application period ending July 31 because these areas are either over capacity or do not allow short-term rentals.)

Harrison, the managing broker at CB Cascade in Wenatchee, said finding buyers in the price point ranging from $450,000-to-$600,000 in the Wenatchee Valley is slowing down, but added, “We still have a large demand of buyers for the area, but they are looking for homes that are well cared for and updated.”  

Dean Rebhuhn, owner at Village Homes and Properties in Woodinville, also reported “very active” open house traffic during June and the first weekend in July. “It’s going to be a hot summer sales season, with low inventory and lifestyle changes driving the market. Multiple offers over listed prices are increasing for well-priced properties.”

Seventeen counties reported a sales price to list price ratio of 99% or higher for last month’s completed transactions of single family home sales, topped by Kitsap County at 104.9%. Also surpassing the 100% ratio were Franklin, King, Pierce, Snohomish, Thurston, Jefferson, Skagit, Clark, Island and Cowlitz counties.

The median price for last month’s 6,842 closed sales was $625,000. That is a drop of 3.85% from a year ago, but prices are up about 12.2% since January when the median price was $557,250. Seventeen counties reported double-digit price gains since January.

“Sale prices in King and Snohomish counties rose for the fifth consecutive month and are only modestly lower than a year ago,” observed Windermere Chief Economist Matthew Gardner. “It will be interesting to see if this trend can continue given the stubbornly high mortgage rates.”

NWMLS director Frank Leach said despite YOY (year-over-year) declines in listings, sales, and prices in Kitsap County, there is pent-up demand. “We have a lot of new inventory coming online. While the spike in interest rates may have held buyers at bay, they are now coming out in droves and we are dealing with multiple offers – in many cases above list price offers with few or no concessions,” said Leach, broker/owner at RE/MAX Platinum Services in Silverdale. The number of cash transactions is also increasing, he noted.

“With the USS Ronald Reagan relocating to Bremerton from Japan and the recent return of the USS Nimitz after a seven-month deployment, rental housing in Kitsap County is at a premium,” according to Leach. “People are now making the move as inventory increases ever so slightly and slowly.”

Leach also reported a robust uptick in building permits, “a barometer for growth in the county,” and he expects an increase in available condominiums, noting YOY supply rose from 1.5 months to 2.33 months.

Commenting on listing activity, economist Gardner noted the number of homes for sale in the tri-county area (King, Pierce and Snohomish) jumped nearly 16.6% from May. “That said, the number of homes for sale in the Central Puget Sound area in June was down 48% from the same month in 2019 (pre-pandemic). I believe much of the reason for this is that almost 33% of in-state homeowners have mortgage rates at or below 3%, and 87% of owners have rates below 5%. There is little incentive to list your home for sale if you don’t have to,” he remarked.

Condos accounted for about 13% of last month’s activity for both total active listings and for closed sales. Brokers reported 886 completed transactions at a median selling price of $483,500, nearly matching the year-ago price of $485,000 for condos sales.

Of last month’s sales of single family homes (excluding condos), more than 21% commanded a price of $1 million or more. About a third (33.4%) sold in the range of $500,000 to $749,999.

June 2023 sales by price range (single family homes only)

4-county Puget Sound Region Pending Sales (SFH + Condo combined)

(totals include King, Snohomish, Pierce & Kitsap counties)

Other Resources:

• Monthly Market Snapshot
• Market Report Video
• Statistical Reports (Members Only)
• Press Release PDF