Last week's economic events included a number of readings on housing related topics. The National Association of Home Builders released its report on builder confidence in housing markets, Housing starts reached their highest level since the great recession, and existing home sales exceeded expectations and the prior month's reading. The Federal Reserve released minutes for its most recent FOMC meeting, which indicated that while a majority of FOMC members are leaning toward raising the Fed's target federal funds rate, concerns over certain aspects of the economy continue to keep the Fed from citing a date for raising its target interest rate.
Are you planning to buy a home in Washington State sometime during 2018? If so, you’ll want to keep reading. This home buying report provides an in-depth look at real estate market trends across the state of Washington. It is fully updated for spring 2018 with all of the latest data.
Washington Home Buying Trends for 2018
Rising mortgage rates, rising home prices, and limited inventory. Those are the trends we’ve been watching over the last few months, and sharing here on our blog.
Mortgage rates have increased gradually but steadily in recent weeks. Home prices in Washington have continued to climb as well. And there’s still a shortage of homes for sale, relative to the demand from buyers.
These are the most important trends that will affect Washington State home buyers in spring and summer of 2018 — and possibly beyond. Here’s what you should know about them:
Mortgage Rates Hit a Seven-Year High in May
Average mortgage rates have climbed steadily since the beginning of this year. Despite a few isolated drops, the overall trend has been upward in nature. According to the weekly industry survey conducted by Freddie Mac, the average rate for a 30-year fixed mortgage loan rose to 4.66% during the week of May 24, 2018. That was the highest average in seven years.
To quote that report:
“Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years. Through May, rates have risen in 15 out of the first 21 weeks (71 percent), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.”
Home buyers in Washington who are “on the fence” about making a purchase might want to consider doing it sooner rather than later. If rates and house values continue to increase, buyers who delay their purchases would encounter higher housing costs down the road.
Home Buyer Demand Remains Strong in Washington
You might expect demand among home buyers in Washington to ease up a bit, in response to rising mortgage rates and prices. But that’s not happening. Demand continues to remain high in real estate markets across the country, and in Washington State specifically.
According to the economic research team at Freddie Mac:
“[Home] Buyer resiliency in the face of higher rates reflects the healthy economy and strong consumer confidence. We forecast modest growth in home sales over the next two years.”
In Washington State, home buyers are still very active within the real estate market. In fact, our state is home to one of the most competitive real estate markets in the country — Seattle. List a home for sale anywhere in the Seattle metro area, and you’ll probably have multiple offers within a week or so. So homes are still very much in demand, despite the rise in mortgage rates.
Inventory Still Tight, Despite Increase in Listings
Tight inventory conditions persist in real estate markets across Washington, as we move further into spring 2018. There are more buyers in the market than there are homes for sale. This leads to increased competition and multiple-offer scenarios.
The good news (for Washington home buyers) is that there has been an uptick in real estate listings, as of late. This could bring some much-needed relief by increasing inventory levels within the housing market.
According to a May 2018 report from the Northwest Multiple Listing Service:
“Northwest MLS brokers added 11,271 new listings to inventory during April, a gain of 6.3 percent when compared to March, and up nearly 5.9 percent versus a year ago.”
Still, most major cities across the state are well below what’s considered to be a normal or “balanced” housing market. And inventory will likely remain tight well into 2019.
Based on these conditions, it’s no surprise that housing analysts and economists are predicting a continued rise in home prices across Washington State. Home buyers will want to prepare early, and be ready to move quickly when the right property comes alone.
According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last five years.