The Seattle-area housing market is dragging. Here’s why

The Seattle-area housing market remained lethargic in November, as high interest rates converged with the typically slow season. Home prices were essentially flat compared to the previous month and few new homes hit the market.

The median single-family home in King County sold for $885,500 in November, roughly the same as a month earlier. Even so, that price climbed 7% from a year earlier, according to data the Northwest Multiple Listing Service released Wednesday. Median home prices reached about $725,000 in Snohomish County, up 4% from a year ago; $540,000 in Pierce County, up 3%; and $550,000 in Kitsap County, up 9%. 

Sellers listed fewer homes in all four counties, with new listings in King County down 29% from October and 11% from the same time a year ago. The Seattle area recorded one of the biggest year-over-year drops in new listings in the U.S. last month, according to Redfin. Only Atlanta recorded a sharper drop, and San Francisco tied with Seattle.  

Fewer homes meant fewer sales. The number of pending sales was down all across the region in November, particularly in Kitsap and Pierce counties, where sales were down by double-digit percentages from a year earlier.

Many would-be sellers have been holding off for months, worried about affording their next home at today’s mortgage rates. 

“The move-up buyer is parked … They’re not going to leave a 2.5% [or] 3% interest rate to jump in,” said Bellevue Windermere agent Kelly Sublett.

The supply of homes for sale is likely to get even slimmer as winter arrives and homeowners hunker down for the holidays, Sublett said. “Inventory, which was already low, is dwindling even lower.”

Buyers facing costly mortgage rates are sitting still, too. That’s especially true for first-time buyers who are hit particularly hard by high rates.

“Everybody is sitting on the fence just waiting. I have so many buyers who will not buy right now because they just can’t,” said Poulsbo John L. Scott agent Lisa Diehl.

Many, she said, are “waiting for that interest rate to just dip a little.”

Mortgage rates remain high, but have begun to ease slightly.

The average 30-year fixed-rate mortgage carried a 7.2% rate last week, down from 7.8% in late October. “The current trajectory of rates is an encouraging development for potential homebuyers,” said Freddie Mac’s chief economist Sam Khater in a statement. 

But rates are still higher than a year ago, when they averaged 6.5%, and far higher than the ultralow 2.5% and 3% rates buyers secured early in the pandemic. Higher rates erode buyers’ budgets by driving up their monthly payments. For most buyers in the Seattle area, home prices haven’t declined enough to offset higher rates. 

All over the country, high mortgage rates throttled the market this year, slowing down home sales and leading fewer people to take out mortgages. 

Given current rates, “the purchasing power of prospective buyers remains stunted relative to a few short years…