October 2023 Greater Seattle Real Estate Report

Is the real estate market, including the greater Seattle real estate market, slowing down? For the third month in a row, NWMLS median price have beaten the prior year.  While not by huge margins, prices continue to exceed last year.  Last October median price was $595,000, this October median price is $602,000.  However, the real story is that transactions are down significantly.  For instance, there were 5,291 closed transactions this October versus 6,464 the prior October.  Thus, an 18% drop in the number of sales.  Again that is not the full story because October 2022 was a slow month.  The previous October (2021), there were 9,983 closed transactions.  Therefore, there was a 47% drop this October from 2 years ago.  While October 2021 was a strong month, 2023 is more of an outlier than 2021. For example, in 2020 there were 10,806 closed sales, but in 2019 there were 8,335 and 2018 there were 8,005.  So even if you compare to the slowest of these months (2018) other than 2022, the number of transactions are down 34%.

So what is going on in the real estate market?  Interest rates are the main focus.  30 year mortgage rates at the end of October neared 8%.  86% of current Washington homeowners have mortgages with interest rates with 5% or less and more than a quarter have rates of 3% or lower.  Those would-be sellers are thinking long and hard before moving.  Thus inventory continues to be low and lower than it would be if interest rates were more inline with what homeowners currently pay.  As a result, even with homebuyers being discouraged with high interest rates, we only have 2.2 months of real estate inventory.  With this low of inventory, we are still in a seller’s market; therefore, prices are not reducing.

In conclusion, yes the real estate market is slowing when it comes to the number of transactions, but this is not translating in lower prices.  In general, when sellers and buyers ask if the market is slowing, they typically do not care about the number of transactions.  They care about the price of the home they are buying or selling.  Thus, for all intents of purposes, the real estate market is not slowing; rather it is holding steady or increasing slightly.