RISMEDIA, February 15, 2011—According to data recently released by RealEstate Business Intelligence (RBI), an MRIS company, there was a pronounced increase of 31% in pending sales in the January 2011 Washington, DC metro area housing market. The RBI Pending Home Sales Index [Washington, DC Metro Area], is a two-year moving window on the housing market using pending sales and median sold price. The results include pending sales through and including January 2011. The market area includes: Washington, DC, Montgomery County, Prince George’s County, Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City.
“The RBI Pending Home Sales Index provides unique insight into the state of the current housing market by measuring the number of pending sales through the most recent month,” says noted real estate expert and RBI/MRIS analyst Jonathan Miller. “The median sold price, which has an advantage over average sales price because it removes outliers, is provided to show the relationship between signed contract activity and prices. The current index shows a significant gain in both metrics which is promising news for sellers due to the increase in activity, and a positive trend for buyers, as pending sales is a leading indicator of confidence in the market.”
Based on the data released by RBI, Miller sees five distinct market trends in the Washington, DC Metro area. According to Miller:
- Pending home sales surge as impact of tax credit expiration last April weakens. The first month of the year began with 3,198 signed contracts, up 31% from January 2010, and 35.2% above December 2010. The month-over-month average change from December to January for the previous five years was 12.3%, indicating that the 31% month-over-month increase was significantly above seasonal norms. Moreover, the January month-over-month and year-over-year results were the highest increases in pending sales activity in more than a decade.
- Median sales price increased due to a more normal mix of sales. The median sold price was $315,000 in January 2011, a 7.5% increase from $293,000 in January 2010, and 1.9% above $309,000 in the same period two years ago. Throughout 2009, and the first half of 2010, the market experienced an unusually elevated period of activity as a result of the federal home buyers tax credit. The increase in median sales price is attributable to reduced activity of first-time buyers who are no longer incentivized by a tax credit.
- While active inventory increased from the same period last year, fewer new listings were added to inventory. There were 14,555 active listings at the end of January 2011, an increase of 7.8% over the same period last year. However, active listings remain 29.9% lower than two years ago in the months following the onset of the credit crunch at the end of 2008. Despite the rise in active inventory, the amount of new listings added to the market over the same period declined 11.9% to 4,600.
- The rise in pending home sales outpaced the rise in active inventory. The surge in pending home sales, and rise in active inventory, resulted in a sharp drop in the monthly absorption rate to 4.6 months in January 2011, from 5.5 months one year ago. Despite the drop, the monthly absorption rate is consistent with the 4.5 average over the past decade.
- It took one week longer to sell a home in January 2011 than it did last year at this time. The average days on market for January 2011 was 83 days, about a week longer than the same period last year and roughly a month longer than the 54 day average for the decade.
“One of the reasons RBI publishes pending home sales for the Washington, DC metro area is because no other available metric provides a better snapshot of the current state of the housing market. The expiration of the tax credit last April had a significant impact on the market data,” states Miller. “It artificially increased sales activity before its expiration, and artificially lowered sales in the second half of 2010 after its expiration. Now, for the first time in two years, pending home sales appear to be free of influence from the tax credit expiration as evidenced by the highest surge in this metric, both month-over-month and year-over-year, in a decade.”
“While pending home sales are up sharply indicating an improving market, there is more inventory available than a year ago, and properties are still lingering on the market longer,” explains Miller. “It continues to be important to seek out the advice of a real estate professional to navigate today’s housing market.”
For more information, visit www.mris.com.