DC-Area Homebuyers Put on the Brakes in October, But That Might Be Temporary

• November 14th 2022

by Tani Levitt

Following the trend of recent months, home sales in the DC region sunk in October. But recent moves in interest rates may result in that drop being relatively short-lived.

A Bright MLS report out Friday on the regional housing market provided a detailed picture of falling sales in the region. As compared with last October, DC area home sales were down 35.6.%, new listings were down 27.6%, and homes were staying on the market nearly a week longer. The sales drop was seen across all local jurisdictions, with Fairfax City (-48.5%), Frederick County (-41.1%), and Fairfax County (-38.6%) experiencing the biggest declines.

"Both buyers and sellers have hit pause in the Washington metro area, as high mortgage rates and economic uncertainty stall housing market activity," the report stated. "In October, the number of new pending sales in the region was down by more than 40% compared to a year ago. This is the steepest drop-off in sales activity since December 2007."

The drop in home sales in recent months coincides with long-term interest rates rising at a historically rapid rate since the beginning of the year. However, news last week that showed inflation easing sent mortgage rates back down. The average rate on the 30-year fixed plunged 60 basis points from 7.22% to 6.62% on Thursday. 

“This is the best argument to date that rates are done rising, but confirmation requires next month’s CPI to tell the same story,” said Matthew Graham of Mortgage News Daily told CNBC. “This was always about needing two consecutive reports of this nature combined with acknowledgement from the Fed that the inflation narrative is shifting.”

This article originally published at https://dc.urbanturf.com/articles/blog/dc-area_homebuyers_put_on_the_brakes_in_october_but_that_might_be_temporary/20308.