The latest sign of the Seattle area’s sluggish housing market? A relative glut of homes sat on the market in May, typically the height of Seattle-area homebuying season.
The slowdown reflects a confluence of elevated mortgage rates and economic uncertainty. In that environment, some buyers are still battling it out in bidding wars while plenty of others take a breather, leaving some corners of the market “dead in the water,” in one local agent’s words.
The story isn’t totally new. While the early months of this year saw an uptick in Seattle-area home sales, deals dipped in April as President Donald Trump announced new tariffs, plunging the stock market and discouraging some home shoppers.
By the end of May, pending single-family home sales had bounced back a bit, but plenty of buyers continued to play it safe, according to monthly data the Northwest Multiple Listing Service released Wednesday.
Spring, the market’s busiest season, “came sooner and ended sooner” this year, said Seattle Windermere agent Candace Hagen.
More sellers put their homes on the market last month, but more of those homes were still waiting for a buyer when the month ended — a sign of cooling buyer interest.
That’s welcome news for shoppers. Seattle-area homebuyers had “more negotiation power in May than any May on record going back to 2018,” said Zillow senior economist Kara Ng.
That is, if they can afford it.
Even as median home prices dipped in some areas, costs remained high. The median single-family home sold for $989,000 in King County in May, down 4% from April and 1% from May of last year, according to the NWMLS.
The picture is mixed across the county: The median single-family home sold for $1 million in Seattle, up 5% from a year earlier, while the Eastside’s $1.6 million median was down 4%. Prices also dropped from a year ago in North and South King County. (May prices likely reflect sales that went pending in April and closed last month.)
Outside King County, home prices climbed. The median single-family home sold for $833,000 in Snohomish County, up nearly 1% from a year earlier; $589,000 in Pierce County, up 5%; and $594,500 in Kitsap County, up 2.5%.
At those prices and today’s mortgage rates, monthly costs are tough for many buyers.
Mortgage rates averaged just below 7% last week, about where they’ve hovered all year.
The mortgage payment on a typical midtier home in the Seattle metro area was about $4,000 at the end of May, the fifth highest among major metros, according to Zillow. That estimate assumes a home costing about $767,600 with a 20% down payment. In Seattle, where the median home costs more than $1 million, the monthly payment is even higher. Buyers without 20% to put down also face higher costs.
Monthly payments dipped a bit in May from a year earlier but have more than doubled since before the pandemic.
Buyers braving today’s market typically rely on high tech salaries, cashing out stock portfolios for a down payment, help from family or having already owned a home they can sell, Hagen said.
And some corners of the market still feel hot. Buyers are losing bidding wars for some homes, especially the rare turnkey Seattle listing priced under $1 million or $1.1 million for a single-family home.
“Multiple offers are still happening on single-family homes below $1 million because you can’t get anything for that,” Hagen said.
But even shoppers who may be able to afford the region’s dizzying costs face big questions: Are their tech jobs safe? Is a recession on the horizon? Is owning even worth the higher cost than the region’s relatively flat rents?
Demand for town homes and condos is especially weak — “dead in the water at the moment,” said Seattle Compass agent Ryan Palardy.
First-time buyers and those who aren’t rushing to find a home before their kids’ school year starts this fall feel less pressure to move immediately, he said.
“Ever since the tariffs went into effect, and everything that’s been downstream of that, they just don’t feel inclined to take a risk on a house that’s going to cost them twice as much as they’re paying in rent at a nice spot right now.”
At today’s demand, it would take about 2 ½ months to sell all the available single-family homes currently listed. That’s still far from a balanced market, but it’s the highest monthly inventory level since September 2018.
Many more condos are available: nearly four months of inventory. The median King County condo sold for nearly $570,000 in May, down 4% from a year earlier.
The rapid increase in King County inventory of all kinds is on par with the market in 2007 and 2008, according to Palardy’s review of NWMLS data.
With some inventory lingering, sellers are offering price cuts and other concessions. More than a quarter of home listings recorded a price drop in May, according to Zillow, the highest share in May going back to at least 2018.
Observers say these patterns are likely to continue unless something shakes up the market, most notably a decline in mortgage rates.
“I don’t see the solution on the horizon unless rates drop,” said Matt Miner, Palardy’s Compass colleague.
But a sharp drop in rates is unlikely.
Mortgage rates are likely to end the year in the mid-6% range, but that prediction comes in the face of a volatile economy, said Ng at Zillow.
“There’s a lot of uncertainty in that forecast.”
