No surprise: Report confirms local cooling in homes market

Two new indicators provide confirmation – if any is needed – that the Washington region’s homes market has cooled significantly. But they also provide some reassurance that the local market is hardly in a state of freefall.

New data from Zillow show that the indicators – median “age” (days on the market) of all inventory being listed for sale and median number of days between listing and ratified contract – are up compared to a year before, but are still below pre-pandemic levels:

• The median age of the D.C. market’s inventory in mid-October was 38 days, below the median of 51 when combining figures from the same period in 2018 and 2019.

• The median days on the market (between listing and ratified sales contract) was 15 days this mid-October compared to 19 days during the same period in 2018 and 2019.

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Among the 10 largest metro areas in the country, Washington was tied for lowest (best) with Boston in the median-age-of-inventory category and second only to Philadelphia (13 days) in the median-days-on-the-market category.

Since an all-time low of 19 days in early April, the median age of the inventory listed on Zillow – now 54 days – has grown at the fastest pace since at least 2018, when this analysis began.

While demand certainly has cooled – analysts estimate there are 32 percent fewer active buyers than there were a year ago – the rapid growth in the median age of inventory may say more about how intensely competitive last year was than about what is happening today.

In 2021, the flow of new listings was on par with prior years, but there were so many buyers flooding the market that listings were gone in the blink of an eye.

“Last year, sellers could seemingly list their home at any price and see multiple offers roll in above list price within days,” said Zillow senior economist Nicole Bachaud. “Now, buyers have some negotiating power, and sellers are under pressure.”

“Buyers are still out there and willing to buy when they find the right home at the right price, which will provide a floor for the price declines we are currently seeing,” she said. “But sellers need to do things right to attract the attention of these buyers – pricing their home competitively and making their listing attractive to online home-shoppers.

Markets in which both days to pending status and the median overall age of inventory are growing indicate demand is slowing across the board. Many of these markets were among the hottest during the height of last year’s buying frenzy and had plenty of room to cool. Austin and Las Vegas are prime examples.

Some markets have seen days to pending stay fairly low, while the median age of inventory has risen much more. This indicates that a subset of homes continue to see strong competition as buyers snatch them off the market quickly, while others linger.

One example is St. Louis, where typical days to pending has remained about a week, while the median age of inventory has jumped to 40 days from a low of nine days this spring.