Signs of Slipping in DC Metro Housing Market

Home sales down more than normal for this time of year; still strong when compared to July 2010 reports

Rockville, MD –(August 10, 2011) – The following analysis of the Washington, D.C. Metro Area housing market has been prepared by housing market expert Jonathan Miller of Miller Samuel, based on the July 2011 RBI Pending Home Sales Index™ released today:

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OVERVIEW

The number of contracts signed for the month of July fell 10.9% from June, a larger decline than the 7.5% ten year average.  While month-over-month contract activity tends to decline in July, the debt ceiling debate dominating media coverage for most of the month probably caused consumers to pause before making a purchase decision.  Even with the hesitation, new pending sales reached their highest June total in six years.   The 29.3% year-over-year July increase in pending sales activity was a result of last year’s lull in market activity in the months that followed the April 2010 contract signing deadline to qualify for the federal homebuyer tax credit.  Median sales price slipped in July to $370,000, consistent with seasonal patterns after reaching a three year high of $379,990 in June.

KEY TRENDS

• July contract signings highest since 2005. In the month of July there were 4,563 contracts signed between buyers and sellers, 10.9% below the June 2011 total of 5,124 and 29.3% above the total in July 2010.  The surge in new pending sales over the same period last year was a result of the sharp drop in market activity in the months following the April 30, 2010 expiration of the federal homebuyers tax credit.  However the month-over-month decline was slightly higher than the five and ten year average seasonal declines of 7.8% and 7.5% respectively over the same period.  The larger than seasonal decline in activity is partially attributed to the pause by consumers as they followed the federal debt ceiling debate unfold during the month.

• Median sales price slipped from prior month, consistent with seasonal patterns.  Based on closed sales, the median sales price for the Washington, D.C. metro area was $370,000 in July, 2.6% below the June median sales price of $379,990 and 1.2% below the federal homebuyer tax credit fueled surge last year at this time.  After excluding last year’s month-over-month 5.8% increase as an anomaly, the five and ten year seasonal average decline from June to July was 2.4% and 2.2% respectively, consistent with the 2.6% monthly decline in July.

• New inventory declined faster than active inventory resulting in lowest July total since 2005.  By the end of July, 5,374 new listings came to market, 15.2% less than the 6,337 listings entering the market in June and 12.7% less than the 6,153 that came online during the same month last year.  The decline in new inventory entering the market kept active inventory for expanding in July.  There were 14,946 active listings at the end of July, 3.8% fewer than 15,538 in the prior month and 9.9% fewer than 16,590 in the July 2010.  The moderation of active inventory, seasonally adjusted, has kept housing prices stable.

• The July absorption rate of new pending sales remained below the five and ten year average.  The monthly absorption rate, the number of months to sell all active inventory at the current pace of new contract signings and a measure of market efficiency was 3.3 months, well below the 5.5 month five year average and consistent with the 3.5 month ten year average.

• Days on market and listing discount changes remain consistent with seasonal trends   The number of days to sell a home in July averaged 68, 5 days slower than June and 11 days slower than July 2010.  The year ago level had been driven lower by the federal homebuyer tax credit.  Days on market is measured by the number of days between the original listing date and the contract date.  The listing discount of spread between the original list price and sales price was consistent with prior month and year ago levels.

The RBI Pending Home Sales Index™ is a two-year moving window on the housing market using new pending sales and median sales price. It provides unique insight into the state of the current housing market by measuring the number of new pending sales for each month through the most recent month.The results include new pending sales through and including July 2011.  The market area includes: Washington, D.C., Montgomery County, Prince George’s County, Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City.