Mid-Atlantic Housing Market is Poised for a Rebound Heading into the Spring Market

Buyers begin to return to the market in January as interest rates begin to level off and sellers may not be far behind

• Variation will be theme across the region with close-in suburbs seeing price increases while prices may decline in second home, vacation markets
• Philadelphia metro sees highest price growth, while prices stabilize in D.C. 
• Days on market increase by 10

ROCKVILLE, Md., Feb. 10, 2023 /PRNewswire/ -- As mortgage rates hit their lowest levels since September, buyers and sellers are coming to terms with 6% interest rates as the new normal. After record low sales activity at the end of 2022, the Mid-Atlantic housing market rebounded in January. Both pending sales and showing activity increased month over month throughout the region, while new listings showed some signs of life, according to the Bright MLS January Housing Market Report released today.

The increased activity shows that the Mid-Atlantic housing market appears to have bottomed out at the end of 2022, however, the housing market remains slower than January 2022. Sales were down 33.4% compared to a year ago, and new listings were 6.5% lower. Transactions are taking longer, with buyers acting more deliberately, but prices are still on the rise. Median days on market rose 10 days to 22, while the median sale price increased 4.5% to $350,000. The Philadelphia metro led the region in price increases, up 4.7%, with Baltimore metro up 3.8%, and D.C. Metro lagging behind, up just 0.2%. 

"Buyers who had been on the sidelines are showing eagerness to return to the market as rates dropped to their lowest levels since September, while sellers are starting to return in some markets, pushing new listings up month over month across the region," said Bright MLS Chief Economist Dr. Lisa Sturtevant. "This is a sign that both buyers and sellers are adjusting to the 'new normal' of 6% mortgage rates, longer transaction times and more negotiations between buyers and sellers. Overall, the Mid-Atlantic housing market is poised for a rebound as we head into the spring market. "

Sturtevant noted that there is significant variation in housing markets across the region. Inventory is expanding in smaller markets, such as the Maryland-West Virginia Panhandle and southern Maryland and some markets such as Frederick and Carroll Counties in Maryland, and Camden and Mercer Counties in New Jersey are also seeing price declines year-over-year. As more workers are returning to the office, housing choices will be evolving. Second home and vacation markets could see further price declines as demand pushes prices higher in closer-in suburban markets of the Washington metro region, where there were higher median sales prices year-over-year in Alexandria City, and Arlington, Fairfax and Montgomery Counties. 

The Philadelphia market demonstrated its resilience in January, leading the Mid-Atlantic region in home price growth. The median home price in January was $314,000, up 4.7% from a year ago. The stronger price growth in January reflects better affordability in the region, as prices have fallen 10% from their summer 2022 peak. Despite that drop, the median price in the region is 31% higher than January 2020. 

Despite decreases in closed sales (-34.7%), new pending sales (-20.6%) and showing activity (-32.5%) from a year ago, each of these metrics showed improvement on a month over month basis, indicating that buyers are returning to the market. New listings increased nearly 50% between December and January, but still remain lower than they have been in nearly two decades, which will create challenges for buyers.

Buyers who returned to the market in January after wrapping their heads around higher mortgage rates were faced with another challenge – a lack of inventory. New listings were down 11.5% year-over-year, and were at the lowest level in more than two decades. There was just 1.11 months of supply across the metro area.

A reflection of more buyers in the market, the median home price rose 3.8% in January to $329,950. However, Baltimore is somewhat a tale of two cities with demand in the suburbs driving the growth.

Like the rest of the region and country, activity in the Baltimore housing market trails last year when mortgage rates were closer to 3.5%. Closed sales, new pending sales, and showings were down 34.6%, 24.0% and 33.7% year-over-year. Active listings increased 40.9% and the typical home spent 22 days on market, up 10 days from January 2022.

Buyer activity increased throughout the D.C. market in January from year-end but they were taking their time making a move. The time for a typical home to go under contract rose to 30 days – 17 days longer than a year ago, and back to January 2019 levels. In the region's largest suburban markets—Fairfax, Loudoun, and Montgomery counties—the median days on market remained below 30. However, the typical home in the District took 42 days to sell in January.

After declining in December for the first time since 2016, the median home price rose slightly (+0.02%) in the metro area in January. Prices appreciated in suburban markets but fell in Washington, D.C., indicating that the suburbs may see more demand and a faster recovery. 

Following a slow end to the year, closed sales, new pending sales and showings were all up in January from December. Year-over-year, closed sales were down 36.1%, new pending sales fell 19.2% and showings were off 32.9%. 

Active listings were up 42.4% year-over-year driven by slower market activity rather than new listings which were down 12.5% year over. However, the number of new listings increased month over month, indicating that inventory should increase in the coming weeks as sellers realize that they can use their equity gains to move up. With just one month of supply, though, buyers will still be faced with limited choices. 

Full Mid-Atlantic and Metro area reports are available at BrightMLS.com/MarketInsights

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.

SOURCE Bright MLS