BrightMLS has release it’s October 2021 report for the Mid-Atlantic region which includes Philadelphia, Baltimore, Washington DC and their respective metro areas.
The report shows that while the market remains solid, there is growing tension between several key market metrics: supply, prices and sales. Supply remains drastically low, and is still dropping. Months of supply is down an average of 31.4% from a year ago in three major metro markets, with just over 1 month of supply. While this has been exerting significatn upward pressure on house prices, it also appears that buyers are not only becoming less willing to pay a premium for their less-than-ideal house, but that affordability is also becoming an issue since price growth has been outpacing income growth. This is reflected in both moderating prices and declining sales: the median house price in the three metros is up a respectable 6.9% from a year ago, but this is a significant deceleration from the previous year’s appreciation of 13.8%. And, sales activity across all three metros is down 10.5% on the year, while in the previous 12 months sales grew by 30.3%. Current leading indicators futher support evidence of “buyer fatigue”: current showings are down 11.6% from a year ago.
Whether home sales activity will continue to decelerate depends significantly on buyers’ confidence. The wild card is overall inflation in the macroeconomy. Housing affordability is already a challenge, and if the costs of consumer goods continue to rise faster than incomes, buyers will defer major purchases, including buying a home. Inflation could also push up house prices – especially new ones – due to rising cost of building materials.
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