King County home prices held steady in August as high interest rates continue to put a damper on home sales.
The median single-family home in King County sold for $906,250 in August, up less than 1% from a year ago, according to new data released Friday by the Northwest Multiple Listing Service.
Prices ticked up or down in nearby counties: Median homes sold for about $730,600 in Snohomish County, down 3% from a year ago; nearly $550,000 in Pierce County, down 1%; and nearly $565,000 in Kitsap County, up 3%. Median means half sold for more and half for less.
Higher mortgage rates — currently averaging 7%, up from 6% a year ago and 3% in 2021 — drive up monthly payments and dampen competition as many would-be buyers abandon the market and others become choosier
“If you’re going to pay 30% more this year than you were going to a year ago, you’re going to be a little more picky,” said John L. Scott agent Jon Bye, based in Kent.
Pending home sales dipped from July to August and were down by double-digit percentages across the region compared with a year ago.
After years of huge pandemic-driven price growth, King County home prices peaked in May 2022 at nearly $1 million and have since fallen 9%. But a limited supply of homes for sale keeps prices from plummeting further.
“It still favors towards a sellers’ market,” Bye said.
New listings of detached single-family houses and townhomes are down from the height of the market this spring and from this time last year. Year-over-year, new listings dropped by 19% in King County, 20% in Snohomish County, 23% in Pierce County and 15% in Kitsap County. That continues a shortage that was present a year ago after mortgage rates began to climb. New listings in King County were down 16% from August 2021 to 2022.
Economists and brokers say high mortgage rates are keeping inventory tight because many homeowners just aren’t interested in moving on to a new home with a higher mortgage rate unless they absolutely have to sell.
“It’s a market of need versus a market of want,” said Capitol Hill Compass agent Jessie Culbert Boucher, whose recent clients have often been selling because of death, divorce or other big life changes, rather than desires like a bigger backyard.
So far, home prices haven’t fallen enough to cut into most sellers’ profits.
Fewer than 3% of homes sold in the Seattle area from May through July were sold at a loss, up from 1% a year earlier but still far below San Francisco’s 12%, according to a Redfin analysis released this week. The median loss in Seattle was about $50,000.
Competition and rising prices are still popping up in some corners of King County.
After prices shot up on the Eastside early in the pandemic, they dropped faster there than in Seattle when rate hikes hit last year. But last month, the median home on the Eastside sold for $1.45 million, up nearly 8% from a year ago, while the median home in Seattle sold for $899,000, down 3%.
Prices dropped 6% in North King County, climbed 3% in Southeast King County (including Auburn, Kent and Skyway) and were flat in the southwestern part of the county (including Des Moines and Burien).
Regardless of location, brokers say homes priced below $1 million are seeing the highest levels of competition as buyers watch their budgets because of interest rates.
Condos can be another more affordable option.
Fewer new condos are hitting the market for sale and fewer people are buying than a year ago, but demand for condos is on the rebound in some areas.
The median King County condo sold last month for $525,000, up 8% from a year ago. In Seattle, the median price was up nearly 11% to $575,000. On the Eastside, the median price climbed 5% to about $600,500.
“People are starting to move back into the city to work, having to go back to the office more,” said Seattle Redfin agent Forrest Moody, who in July listed a top-floor, one-bedroom condo on Capitol Hill that found a buyer in 10 days for the full list price.
With high interest rates, “you have a lot of people who are being forced into buying a condo that maybe in previous years would have bought a townhome if they could afford it, but now they can’t,” Moody said.
Some investors are snapping up condos to rent out “because they see an opportunity … before the prices get high again,” Moody said.
Seattle remains one of the least affordable housing markets in the country. A homeowner making the median Seattle-area income would need to spend 45% of their income to afford the monthly payment for an average-priced home, even with a 20% down payment, according to a recent report from Black Knight, a mortgage data company. That is among the highest shares in the country and a stark increase from an average of 27% between 1995 to 2003.
“The affordability challenge continues to be extremely prevalent in our market,” Culbert Boucher said. “It’s tough to see what the way out of that is, [given] this combination of prices staying pretty steady while rates have increased.”
Dick Beeson, managing broker at RE/MAX Northwest in Gig Harbor, said in a statement Friday “the simple answer for many is that the market needs more existing home sellers to decide to move sooner rather than later, but the reality is that’s not going to happen anytime soon.”