March 2023 Housing Market Update

Reading the headlines you might well have the impression that the bottom has dropped out of house values locally. In fact, the most recent data shows that while the number of units sold and sold dollar volume in January did decline significantly in the Metropolitan DC area compared to twelve months earlier, prices reflect much more staying power. In fact, the average and the median sales price increased other than in DC.  In Fairfax County, for example, the median sold price was about 6% higher than in January 2022.

Strong home prices reflect the continued lack of supply. And although houses stayed on the market in January a few more days than they did a year earlier, the average days on market remains low. In short, houses still sell quickly.

Notwithstanding higher mortgage rates, home builder confidence rose in February for the second straight month according to the NAHB/Wells Fargo Housing Market Index. Given that this metric declined in every month in 2022, however, it is still not back to the level at which home builders are deemed to view conditions as “good.”  We expect the supply-demand imbalance to persist in 2023 as it will take some time for supply to catch up with demand. For small builders, since the average sales price for the lots in popular areas (strong job growth, low employment rate, great schools, convenient public transportation or quick access to business centers) remain the same or higher than last year, yet, construction cost rise (due to shortage and cost of labor, higher construction loan interest rate, material cost remain high or some materials are even higher than last year), most of the experts do not think the price for new construction homes would adjust even lower than the end of 2022. The matter of fact, in some areas, new construction home prices are higher than last spring or have bounced back from last fall when mortgage interest rate was over 7% ( higher than the current rate)

Another potential short-term tailwind for buyers is Amazon’s announcement last week that was delaying the start of construction of the second phase of its new headquarters in Arlington.

If you are thinking of buying or selling, you might not want to further delay your plan, as buyers are already out looking! Reach out to me for any of your real estate questions.