King County home prices drop in August: ‘Just a hiccup’?
The median price of single-family homes sold in King County dipped last month to $430,000.
Seattle Times business reporter
The median price of single-family homes sold in King County dipped last month to $430,000, snapping a run of six consecutive monthly price gains.
There were 2,560 homes sold in August, down from 2,648 in July, according to the Northwest Multiple Listing Service. July’s median price was $434,000.
It’s too soon to tell why the market blinked last month.
“It does look like in August it weakened,” said Dick Conway, co-publisher of The Puget Sound Economic Forecaster. But if the region’s healthy job growth continues, he said, “this might just be a hiccup.”
Rising interest rates could have thrown cold water on the market’s activity: The average rate on a 30-year fixed mortgage was 4.46 percent in August, up from 4.37 percent in July and a low of 3.35 percent last December, according to Freddie Mac.
The higher interest rates, combined with rising home prices, could dampen some buyers’ appetites, Conway said. But those factors just as easily could prompt others to close a deal before prices and rates rise further.
Summer vacations are a more likely reason for the slowdown in the market, brokers said.
Even so, August was a strong month compared with August 2012: King County’s median sale price was about 14 percent higher and the number of closed sales was up 18 percent, according to the MLS. There were 2,845 pending sales as well, up from 2,623 a year ago.
Seattle’s single-family- home prices continued to rise, up 11 percent over the year: The median sale price in August was $457,000, a big jump from $430,000 in July.
Median sales prices also rose from a year earlier in Snohomish and Pierce counties: The median price was $310,000, up 15 percent over the year, in Snohomish and $230,000, up 14 percent, in Pierce.
“Despite jumps in prices and interest rates, homes are still more affordable than they have been in decades,” said Mike Gain, CEO of Prudential Northwest Realty Associates in Seattle, in an MLS statement.
The drop in median price over the month coincided with the number of single-family homes available for sale in King County rising to 4,900, its highest monthly level so far this year.
While the single-family-home segment of the market had a slower month, buyers drove up the price of condos in King County: The median price jumped to $255,000, up from $231,000 in July and from $194,750 a year ago, according to the MLS.
“Rents are going through the ceiling,” Gain said, “so I believe people are buying homes at the lower end of the range.”
The Seattle metro area’s rent hikes over the past year have been among the highest in the nation, according to two recent studies. The average rent after price breaks from landlords was about $1,100 in the second quarter, according to New York-based Reis Inc.
In Washington state, mortgage applications to buy a house in July, the latest month available, were down 14 percent over the previous month, but up 9.6 percent over the year, according to the Mortgage Bankers Association.
Adjustable-rate mortgages, or ARMs, accounted for 8.5 percent of mortgage applications in July, up from 5.3 percent a year earlier, according to the association.
ARMs typically offer lower interest rates than 30-year fixed mortgages for an introductory period such as three years before resetting to and moving with the market interest rate.
They’re attractive to buyers who are betting on selling or refinancing the home before the rate resets — but some buyers who used ARMs to buy homes during the bubble weren’t prepared financially for the higher payments when their loans reset and they couldn’t sell or refinance their home.
That increase in ARM applications is a bit worrisome to economist Conway.
“I’m surprised that they’re being offered, given how banks got burned in the past,” he said.
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org. On Twitter @sbhatt