Rates, Prices and Contract Ratio? The 3 Most Important Charts For The Fall Market

• September 6th 2024

by UrbanTurf Staff

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With cooler temperatures arriving, fall is just around the corner, which means a new housing season is approaching. Today, UrbanTurf looks at what we think will be the metrics that will determine the direction of the DC-area market in the coming months.

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The path that the chart above takes this fall will probably be the best indicator of the trajectory of the housing market. A year ago, 30-year mortgage rates hovered around 7.2%, double the rate from late 2021. Rates have dropped around 100 basis points since that time, although reports indicate that is not enticing buyers to get off the sidelines. The Fed's actions later this month could result in lower interest rates but many already think that the coming Fed cut has already been baked into current rates. 

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Even with a lower interest rate environment, DC-area home prices may hold buyers back in the coming months. Median prices in the region have hovered around record highs for the last six months, remaining north of $600,000 since March. UrbanTurf has anecdotally heard that more and more sellers are beginning to cut prices for homes that have sat on the market. If prices begin to drop as a result, buyer activity will likely increase. 

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Contract ratio compares the total number of homes under contract in a given period to the overall number of active listings, providing a good sense for the level of competition in the housing market. If this ratio is above 1.0, it indicates a high level of homebuyer competition and below 1.0 points to a lower level of competition. For the last several months, the ratio has hovered around 0.75 in the DC region; if this stays at this level or drops in the coming months, prospective buyers may see opportunity. 

This article originally published at https://dc.urbanturf.com/articles/blog/rates_prices_and_contract_ratio_the_3_most_important_charts_for_the_fall_ma/22669.