DC Metro Closes 2012 with Double-Digit Price Growth

Lowest level of new listings for any month on record

OVERVIEW

As the year concludes, most indicators point to a healthier market than last year, but several clues reveal a possible softening of demand in the near-term.  Sales numbers and the median price are up from this time last year, but new contracts have declined slightly for the 2^nd straight month. Additionally, unseasonable declines in sales and median price from November could be an early sign of weakening demand.  The market is experiencing historically low inventory, with active listings at their lowest December-level in nearly a decade, and new listings at their lowest level for any month on record. While intuitively low supply would put upward pressure on prices, it could be that many buyers are deciding to delay their home purchase until more options become available on the market, which is loosening the pressure on pricing as evidenced by the $11,000 drop in the median sale price from November.  Many potential sellers could be hesitant to enter the market during the winter months, so an increase in the spring inventory would likely entice buyers back into the market, and push median prices back up.

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CLOSED SALES

Improvement from last year, but unseasonal decline in sales from November.  There were 3,323 sales in December in the Washington DC Metro Area, 4.9 percent higher than this time last year.  Despite the year-over-year rise, sales activity fell 6.6 percent from last month.  Historically, sales tend to rise between November and December, with the 10-year average gain at 6.3 percent.  The slow down in sales could be a sign of tempered demand as we begin 2013, resulting from lingering economic uncertainty, and the unusually low inventory of homes for sale on the market.  A similar pattern can be observed in sales across all property segments, in which they are up from last year, but down from last month.  Condos led in year-over-year sales growth, up 7.3 percent from last December.  Sales of townhomes and single-family homes rose 6.4 and 2.6 percent respectively.

PRICES

Double-digit year-over-year price growth remains, but there are early signs that the pattern could be changing.  At $359,000, the median home price in the DC Metro Area is 10.5 percent higher than this time last year, the 3^rd consecutive double-digit increase.  While prices continue to rise over last year, the median fell slightly from last month, down 3 percent.  Prices are generally stable from November to December, so the small decline could be an early sign of weakening demand.  Median sale prices rose throughout most of the metro area from last December.  Once again, Falls Church City leads all jurisdictions with a 26.1 percent gain from this time last year, however prices there tend to be volatile due to the low quantity of homes sold.  The median price for single-family homes climbed the most from last December, up 12.9 percent, a gain of $51,000.  This is the highest year-over-year gain for this property segment in 7 years.  The median sales price for condos rose 10.4 percent from this time last year, and prices for townhomes rose 8.3 percent.

NEW CONTRACTS

Second month in a row of year-over-year declines, most pronounced for single-family homes.  There were 3,097 new contracts signed in December in the DC Metro Area, down 4.7 percent from last December, and down 17.0 percent from last month.  New contract activity typically falls between November and December.  The 10-year average monthly decline for December is -15.2 percent.  New contracts are down across all property segments, with the sharpest drop occurring among single-family home contracts, which fell 7.0 percent from last December.  Townhome contracts are down 3.1 percent, and contracts on condos fell 2.2 percent from this time last year.

INVENTORY

Active listings drop below 7,000 for the first time in over 7 years; new listings are the lowest on record.  There were 6,466 active listings in the DC Metro Area at the end of December, a drop of over 4,200 listings compared to last year.  All property segments are being impacted, with active listings down over 40 percent across the board.  There were only 2,465 new listings entered in December for the entire metro area, which is the lowest number of new listings on record for any month with data available back to 1997.  The low inventory of homes for sale continues to drive down the median days on market, which at 29 days, is 21 days lower than this time last year.  Impacts can also be seen with the average sale-to-list-price ratio, which continues to climb, up to 96.3 percent from 93.0 percent a year ago.