Severe inventory shortages, coupled with unseasonably cold temperatures and several inches of snow in the Puget Sound lowlands, strained the Washington housing market last month beyond expectations, according to the latest report from the Northwest Multiple Listing Service.
Market data for the 26 counties included in the report showed that new listings dropped 12.3% last month compared to December 2020. Year-over-year inventory, pending sales and closed sales all fell by double digits as well.
Washington brokers reported closing 8,017 sales last month, a drop of nearly 1,000 transactions from the year-ago total of 9,008. Eleven counties had double-digit declines, including King (16.3%) and Snohomish (17.6%) counties. October was the only other month in 2021 when year-over-year sales fell.
Dick Beeson, a managing broker at RE/MAX Northwest Realtors, said the drop in sales isn’t that surprising.
“That’s to be expected considering inventory in the fourth quarter was down sharply from last year,” he said in the report. “You can’t sell what isn’t there.”
In fact, inventory last month was remarkably low. There were only 3,240 active listings of homes and condos area-wide. The report said that’s the first time that figure has dropped below 4,000 in a decade.
That lack of inventory might be why prices were to be the only thing that rose between last month and December of 2020. Overall, prices increased 17.4%. The median price for last month’s closed sales was $572,900, up from twelve months ago when it was $488,000.
Matthew Gardner, chief economist at Windermere Real Estate, said an increase in inventory would likely result in a market-wide drop in prices. Although he said a herculean increase in inventory isn’t likely for 2022.
“The Puget Sound region is in dire need of more housing units, which would function to slow price growth of the area’s existing housing,” he said in the report. “However, costs continue to limit building activity, and that is unlikely to change significantly this year.”
Despite inventory shortages, realty experts expected the market to be strong headed into the new year. Last year was one of the best years on record for the number of pending sales in the Puget Sound area, the report said.
However, J. Lennox Scott — the chairman and CEO of John L. Scott — said the spell of severe winter weather in the closing days of December may have hampered market expectations.
“The week of snow and ice that hit Puget Sound in late December delayed the big kick off to the 2022 housing market by about a week,” he said in the report. “This held back buyers who have been waiting patiently for each new listing to hit the market.”
But last month’s numbers haven’t left housing experts pessimistic about 2022. Overall, they say, 2021 was a great year for the Puget Sound housing market, and they expect this year will be the same.
“Fresh on the heels of the holiday season and snowy weather, the local market will see continued strong buyer demand, multiple offers and premium pricing,” Scott said. “This year is poised to be another great year in residential real estate.”