Rising mortgage rates and high prices are beginning to take its toll on prospective home buyers throughout the Mid-Atlantic, as sales were down 7.6% year-over-year, according to the Bright MLS Monthly Housing Report released Monday. According to the report, as home buyers have pulled back, active listings increased for the first time since June 2015. Despite a deceleration in sales activity, the median home price in the region continues to rise quickly, reaching a record high of $399,000 in May—$124,000 higher than it was five years ago, Bright MLS stated.
“Higher mortgage rates and fast-rising prices are starting to take a bite out of some prospective buyers’ purchasing power. The monthly payment for the typical home in the Mid-Atlantic is 44% higher than it was a year ago,” said Dr. Lisa Sturtevant, Bright MLS chief economist. “As inventory has started to expand, there will be more options for buyers. However, it still remains a seller’s market with homes at record highs and half of all homes selling in less than 6 days.”
Washington D.C. Metro: Despite fewer sales, market remains competitive
- Compared to last year’s frenzied pace, home sales activity in the Washington metro area has decelerated, with sales down 11.6% compared to May 2021. A lack of inventory, along with affordability challenges and rising mortgage rates, have created headwinds in the market.
- Despite fewer sales, home prices continue to rise briskly across the metro. At $605,000, the median price was up 8.0% compared to a year ago and is now nearly $160,000 higher than it was five years ago.
- Low inventory has been a constraint on the Washington area market. The number of active listings declined compared to last year, however the drop was less than it has been in recent months.
“The Washington housing market has remained competitive. However, the deceleration in buyer activity suggests that economic headwinds are drawing some prospective buyers out of the market,” Sturtevant said. “Inventory is still low, although in some local markets supply may have bottomed out. In the months to come, expect housing market activity to be slower than the frenzied pace of last year. Prices will continue to rise, but price increases will be lower than they have been over the past two years.”
Baltimore Metro: Market conditions are beginning to cool
- Home sales in the Baltimore metro area were down 6.9% compared to May 2021, the sixth month in a row that sales have fallen compared to the frenzied pace of a year earlier. New pending sales in the metro area were down 19.2% from last year, and new pendings also dropped between April and May.
- While sales activity was lower, prices continued to rise. The median sales price in May increased 10.0% year-over-year, and the region’s median price is now more than $101,000 higher than it was five years ago.
- Inventory increased 2.5% between May 2021 and May 2022. This is the first increase in active listings in the Baltimore metro area since June 2019. The increase in inventory is being driven by a slowdown in buyer activity, rather than a rise in the number of new listings in the region.
“The Baltimore area housing market is at a transition point. After two years of frenzied activity, market conditions are beginning to cool. Higher mortgage rates and rising prices have begun to cause some prospective buyers to hold back. Inventory has started to expand which means that buyers that are in the market will have more options. In the months to come, expect prices in the Baltimore metro area to continue to rise, although the pace of price appreciation will be lower than it has been,” Sturtevant said.
Philadelphia Metro: Sales down, while prices rise quickly
- In May 2022, the number of home sales in the Philadelphia metro area was 6.3% lower than in May 2021 and the number of new pending contracts declined by 11.2%.
- Despite the economic headwinds, there is still relatively strong demand in the Philadelphia market. Home prices in the Philadelphia metro area continue to climb, with the median sales price up 12.7% in May. The median home price in the region is now more than $105,000 higher than it was five years ago.
- There were 15.0% fewer active listings at the end of May compared to a year ago. However, inventory expanded by 8.0% between April and May, a bigger increase than a typical month-tomonth change, signaling that supply may have bottomed out.
“Expect home sales activity to continue to decelerate. Inventory will increase somewhat as buyers pull back. The higher-priced segment of the Philadelphia market could be more resilient, as higher-income buyers will be less sensitive to higher mortgage rates. Overall, home prices in the Philadelphia metro will continue to rise, although the pace of price appreciation will ease over the coming months,” Sturtevant said.
Learn more at Bright MLS.com.