Bright MLS September Housing Report: Sales Down, Prices Still Rising in the Mid-Atlantic

Outlook is for a Chilly Fall Market

• The median price in the region was $385,500 in September, a 4.2% increase compared to last year. Home prices in the Mid-Atlantic are more than 35% higher than they were in 2019.
• Inventory increased from August to September, but the number of active listings at the end of September was 11.2% lower than last year. Housing supply across the Mid-Atlantic has been below 2022 levels for four consecutive months.
• Steep drops in the Bright MLS T3 Home Demand Index (HDI) signal a cooling market. Demand will be held back as fewer buyers can qualify for a mortgage or simply may be unwilling to adjust their budget to a smaller or lower-priced home. Yet the tug of war between supply and demand should hold prices firm.

NORTH BETHESDA, Md., Oct. 10, 2023 /PRNewswire/ -- Home prices in the Mid-Atlantic region continue to rise even as the combination of high mortgage rates, low inventory, and the transition to a fall market subdues transactions. The region may be nearing a price ceiling, however, as the outlook is for growing inventory and a pullback in demand this fall.

"Despite mortgage rates above 7%, prices are up in most markets here in the Mid-Atlantic," said Dr. Lisa Sturtevant, Bright MLS Chief Economist. "Low inventory has kept home prices rising but the pace of price growth is going to slow this fall."

In September, the median sale price in the Mid-Atlantic region was $385,500, up 4.2% compared to a year ago. Home prices in the region are more than 35% higher than they were prior to pandemic; however, the typical monthly payment has nearly doubled in response to both rising prices and rising mortgage rates.

Sales activity continues to be low across the region. New pending sales are down 12.4% and closed sales decreased 20.0% year-over-year. Sales also fell off in September compared to August, which reflects a seasonal slowdown in the market.

But the slowdown could also be a sign of a shift ahead. Higher mortgage rates—perhaps even hitting 8%--will cool buyer activity as we head into the fourth quarter. And while inventory is still low, there are signs that listing activity is increasing slightly. In September, a total of 21,245 new listings came onto the market, which is still a historically low level of listing activity. However, there were more new listings coming onto the market than there were new pending sales which indicates that inventory could be starting to increase.

The Bright MLS T3 Home Demand Index (HDI) reflects the shifting market conditions and signals that a market contraction is likely in the fourth quarter. The HDI for the Philadelphia, Baltimore, and Washington D.C. regions are all below 50 in October, indicated Limited market activity.

Looking ahead, it seems more likely that mortgage rates may reach 8% rather than return to 6% in 2023. Elevated mortgage rates will limit future new listings as potential sellers cling to their homes and locked-in rates that are half of what we are seeing today.

Demand will be held back as well since fewer buyers may qualify or willingly adjust their budget to a smaller or lower-priced home. Additionally, the decreases in rental rates may persuade buyers to pause their pursuit of homeownership—at least temporarily. Yet the tug of war between supply and demand should hold prices firm. When rates start to drop, the pressure on prices will only grow as buyers return to the market.

September Mid-Atlantic Housing Market by Region

Philadelphia:
Price Growth Strongest Yet for 2023
Transactions continue to be held back
The Philadelphia metro has historically been a relatively more affordable market, but the continued pressure on prices and climbing mortgage rates have hindered buyers.

• Price growth in the Philadelphia metro has been unyielding, with the median price up 7.6% in September, the largest gain this year.
• At $355,000, the median price in Philadelphia for September 2023 is roughly 46% higher than before the pandemic. With mortgage rates around 7.5%, the typical monthly payment has nearly doubled.
• Sales activity continues to slow due to the seasonal cooldown, short supply, and eroding affordability across much of the Philadelphia region.

Baltimore:
Inventory Shortage As New Listings Remain Low
Prices continue year-over-year gains
There are fewer buyers in the market in the Baltimore metro area. However, those that are motivated to continue on despite higher mortgage rates face persistently low supply and high prices.

• Though down from its record high last month, the median price in the Baltimore metro in September 2023 was $379,900, up 4.1% from a year ago. Home prices in the region are now more than 30% higher than they were prior to the pandemic.
• The Baltimore metro had 4,201 active listings at the end of September 2023, which is 13.5% lower than September 2022. Inventory is also down 58.7% compared to September 2019.
• New listings are at a two-decade low. Yet in September, new listings did outpace new pending sales, an indication that that rising mortgage rates are slowing buyer activity.
• The Bright MLS T3 Home Demand Index (HDI) for the Baltimore metro area has declined sharply, signaling slower market conditions ahead.

Washington, DC:
Closed Sales Slow While Prices Grow
Inventory still at a deficit compared to 2022
Price appreciation has rebounded in recent months. While low inventory is still a major obstacle in the market, eroding affordability is a growing challenge as mortgage rates move closer to 8%.

• The median price in the Washington metro was $550,000 in September 2023. After several months earlier this year when prices decline or were flat, prices have been increasing in recent months. The median price in the region increased by 3.4% compared to a year ago and is 25% higher than pre-pandemic.
• The number of active listings is still very low. The Washington metro had only 6,646 active listings at the end of September 2023. This was a decrease of 18.6% from last year and roughly half (54%) of the homes on the market in September 2019.
• The Bright MLS T3 Home Demand Index (HDI) for the Washington, D.C. metro area has declined sharply, signaling slower market conditions ahead.
• Demand will be held back as well since fewer buyers may qualify or willingly adjust their budget to a smaller or lower-priced home. Additionally, the decreases in rental rates in many parts of the region may persuade buyers to pause their pursuit of homeownership—at least temporarily.

About Bright MLS
Bright MLS was founded in 2016 as a collaboration between 43 visionary associations and two of the nation's most prominent MLSs to transform what an MLS is and what it does, so real estate pros and the people they serve can thrive today and into our data-driven future through an open, clear and competitive housing market for all. Bright is proud to be the source of truth for comprehensive real estate data in the Mid-Atlantic, with market intelligence currently covering six states (Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia) and the District of Columbia. Bright MLS's innovative tool library—both created and curated—provides services and award-winning support to well over 100K real estate professionals, enabling their delivery on the promise of home to over half a million home buyers and sellers monthly. Learn more at BrightMLS.com.

The full Mid-Atlantic and new area reports are available at BrightMLS.com/MarketInsights.

SOURCE Bright MLS