Real Estate Report: Are Better Days on the Way for Homebuyers?

February was a rough one. But the Busy Season is almost here.

By Lindsey Schober March 18, 2024

It’s here. Welcome to the start of the Busy Season, aka spring, the time of year when houses look their best, and everyone (it seems) jumps into the market. But this year hits different.

According to the Northwest Multiple Listing Service’s (NWMLS) February Market Report, Seattle-area sellers and buyers face a triple threat as spring approaches: high interest rates, low inventory, and increasing prices. These headwinds have dragged on the market for several months already, leaving many would-be Seattle buyers and sellers stuck on the sidelines.

Even with some increases in sales and listings that are in line with the season, February’s results show that the triple whammy has “inhibited prospective buyers’ purchasing power as well as prospective sellers’ willingness to give up low-rate mortgages.”

In other words, sellers feel locked into their current homes (and low-rate mortgages) and don’t want to list if they can wait, while the math ain’t mathing for many buyers, whose ability to afford a home diminishes with higher interest rates. Not to mention climbing home prices.

In February, Seattle’s median home price reached $845,000, a 12.7 percent increase year-over-year, NWMLS data show. But, for a buyer to “comfortably afford” a home in Seattle, they need to earn $213,984, a Zillow report says—79 percent more than what buyers needed to earn just four years ago, back when the average 30-year fixed mortgage rate averaged 3.1 percent.

In February, the NWMLS reported interest rates landed around 6.9 percent.

A recent Redfin analysis found nearly 90 percent of people with mortgages have an interest rate below 6 percent. Over half have a rate under 4 percent. It’s no wonder that sellers are feeling locked in—who wants to swap a 4.5-percent rate for something in the high sixes?

Total active listings in the city of Seattle rose 12.9 percent, including 960 new listings. And 585 sales transitions closed, a 10.6 percent increase. However, the city’s inventory remained painfully low in February, at about 1.7 months—well under the four to six months needed for a balanced market, NWMLS data show.

Plus, competition was fierce. Over three quarters (77.4 percent) of homes on the market in Seattle last month went under contract within two weeks, Redfin reports. The national median was 48 days. Almost a third (30.9 percent) of homes sold over the listing price, Zillow data show.

If February is any indication, there is cause for “cautious optimism” for the Busy Season ahead.