D.C.-area home sales have slowed and there are fewer potential buyers signing contracts than a year ago. Yet, selling prices continue to set record highs.
The perplexing question as to why, is not so perplexing: if you look at what’s selling.
The median selling price is based on prices of closed sales, but as the number of first-time and entry-level buyers fall, the median price goes up.
“The buyers that are out there are tending to skew towards higher-priced homes. More single family homes are being sold, and fewer condos are being (sold). That mix of homes being sold is really what drove home prices up and hitting that new record,” said Lisa Sturtevant, chief economist at listing service Bright MLS.
The median price of what sold in the D.C. area in May was another record high: $695,950, up 3.1% from a year ago. Contracts signed to buy a home in the D.C. region in May were up 3.5% from a year earlier, but despite the May bump, new pending sales are still down 2.8% year-to-date.
Another perplexing question that arises from May statistics is the sudden drop in sellers, with new listings in the D.C.-area coming to a screeching halt. At the end of May, there were more than 10,000 homes for sale in the D.C. area, 41.6% more than a year ago. But new listings in May rose just 0.4%.
“Some sellers are thinking there is a lot of uncertainty out there, we’re hearing about buyers holding back. Maybe I missed my opportunity to sell. I don’t need to, so maybe I will wait until later in the year,” Sturtevant said.
DOGE cuts and the ripple effect throughout the region are now considered a major driver behind the increases in homes for sale throughout the D.C. area this spring. There is likely a second wave coming.
“Are there are folks who have been affected by the federal workforce cuts here who are frankly waiting perhaps for severances and other payoffs to end later this year, and then they are going to decide to sell,” Sturtevant said.
In May, the number of closed sales in the D.C. region was down 6.5% from a year earlier. Bright MLS said year-to-date sales are now tracking 2.0% below last year’s level.
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