RealEstateEconomyWatch.com

Pending sales in the Washington DC and Baltimore markets returned to boom levels for the first time in years, even though prices experienced a seasonal decline.

The summer home sales season in the Washington, D.C. metro area market finished with the highest number of signed contracts for August in four years. There were 4,169 contracts signed in August 2011, 8.6percent less than the 4,563 contracts signed in July, but consistent with seasonal trends. New pending sales were 19.9 percent above the August 2010 level but that increase is exaggerated due to the dearth of activity in the months following the expiration of the tax credit in April 2010. The median sales price for August 2011 showed a similar seasonal pattern, declining 3.8 percent to $356,000 from $370,000 in July 2011 but was essentially unchanged from August 2011.

Key trends in the DC market included:

• August contracts reflected long term seasonal trends. There were 4,169 contracts signed in August 2011, 8.6percent less than the 4,563 contracts signed in July, consistent with the 5-year 9percent average month-over-month decline and the ten year 7.5percent average month-over-month decline. The monthly total was the highest number of August signed contracts in 4 years. New pending sales were 19.9percent above the August 2010 level but that increase is exaggerated due to the dearth of activity in the months following the expiration of the federal homebuyer’s tax credit in April 2010.

• Median sales price slipped from prior month, consistent with seasonal patterns. The median sales price for August 2011 was consistent with seasonal long-term trends, declining 3.8percent to $356,000 from $370,000 in July 2011 but was essentially unchanged from August 2011. Median sales price has averaged a 3.6percent month-over-month decline over 5 years and a 2.2percent month-over-month decline over ten years.

• Active inventory remained just above ten year average. There were 14,325 active listings at the end of August 2011, 4.8percent above the 13,667 monthly average of the past decade. However, consumers were faced with lower inventory to choose from than the same period a year ago. Active listings fell 11.7percent below last year’s levels and 4.2 percent from the July 2011 total of 14,946. There were 9.7 percent fewer listings added to the market in August 2011 than in July 2011.

• The seasonal decline in demand was matched by the decline in supply. The absorption rate was 3.4 months in August 2011, essentially unchanged from 3.3 months in July 2011 but was faster than the 4.7 month absorption rate in August 2010. The number of months to sell all active inventory at the current pace of new contract signings is a measure of market efficiency.

• Time to market a property faster than 5-year average. The average days on market was 70 in August 2011, edging up from 68 days in July 2011 and 62 days from August 2010. However, the 2.9percent month-over-month increase was roughly one third the 9.2 percent average July to August increase over the past decade. The average discount from original list price was 6percent in August 2011, edging higher than 5.8 percent in the same month last year but below the 7 percent average in August 2009.

Baltimore area home sales enjoyed their best August in five years as buyers took advantage of affordable prices and record low interest rates.  While August pending sales of 2,365 was 1.7 percent below the July 2011 total of 2,407, the current decline was well below the 6.9 percent average month?over?month decline of the past 5 years and the 4 percent average month?over?month decline of the past ten years.  Median sales price also outpaced seasonal patterns, rising 4.4 percent to $235,000 in August from $225,000 in July.

Key trends in the Baltimore market included:

• August contracts reflected long term seasonal trends. There were 4,169 contracts signed in August 2011, 8.6 percent less than the 4,563 contracts signed in July, consistent with the 5-year 9 percent average month-over-month decline and the ten year 7.5 percent average month-over-month decline. The monthly total was the highest number of August signed contracts in 4 years. New pending sales were 19.9 percent above the August 2010 level but that increase is exaggerated due to the dearth of activity in the months following the expiration of the federal homebuyer’s tax credit in April 2010.

• Median sales price slipped from prior month, consistent with seasonal patterns. The median sales price for August 2011 was consistent with seasonal long-term trends, declining 3.8 percent to $356,000 from $370,000 in July 2011 but was essentially unchanged from August 2011. Median sales price has averaged a 3.6 percent month-over-month decline over 5 years and a 2.2percent month-over-month decline over ten years.

• Active inventory remained just above ten year average. There were 14,325 active listings at the end of August 2011, 4.8 percent above the 13,667 monthly average of the past decade. However, consumers were faced with lower inventory to choose from than the same period a year ago. Active listings fell 11.7 percent below last year’s levels and fell 4.2 percent from the July 2011 total of 14,946. There were 9.7 percent fewer listings added to the market in August 2011 than in July 2011.

• The seasonal decline in demand was matched by the decline in supply. The absorption rate was 3.4 months in August 2011, essentially unchanged from 3.3 months in July 2011 but was faster than the 4.7 month absorption rate in August 2010. The number of months to sell all active inventory at the current pace of new contract signings is a measure of market efficiency.

• Time to market a property faster than 5-year average. The average days on market was 70 in August 2011, edging up from 68 days in July 2011 and 62 days from August 2010. However, the 2.9percent month-over-month increase was roughly one third the 9.2 percent average July to August increase over the past decade. The average discount from original list price was 6 percent in August 2011, edging higher than 5.8 percent in the same month last year but below the 7 percent average in August 2009.