seasonality is back (and macro-ality never left)
The usual holiday season market contraction has begun, with macroeconomic factors layering on an additional smothering effect. Despite all of this, home prices have remained resilient.
King County, with November’s count of 1,596 being 31% below October and 7% lower than one year ago. In fact, November 2023’s count was the lowest November in King County in at least the past decade (new listings data doesn’t extend past 2013). With the market contracting in many ways that are expected when temperatures begin to drop, prices have remained somewhat resilient. As an example, the median sold price for all home types in King County in November 2023 was $800,000, a 5% increase compared to one year ago and the largest year-over-year increase since October 2022. Where prices bucked the seasonal trend, albeit marginally, was in the month-over- month change: a 0.7% decline, versus what has historically been a decrease of 1.2%. With the finish line to 2023 in sight, expect a similar one-two combination of seasonality and macro-ality to play out again in December. Sales, new listings, and inventory all typically experience a steep drop-off from November and this will undoubtedly be the case again this year.
With 2023 winding down and 2024 on the horizon, King County residents, as they often do, are turning their attention away from the buying and selling of real estate and towards the holiday season. And with that, there are a few predictable trends that occur in November (and then again in December)—namely, month-to- month declines in sales counts, new listings, and inventory. And while this “seasonality” was indeed back in all its glory last month, macroeconomic factors (particularly high interest rates) continued to weigh on the market. Beginning with the latter, we would be remiss not to mention the Fed’s decision yesterday to keep the federal funds rate at 5.25%. Although inflation cooled every so slightly in November (to 3.1% from 3.2% in October), Chairman Jerome Powell recently noted that “labor, which is especially important for inflation in core services ex[cluding] housing, shows only tentative signs of rebalancing” and there is a “long way to go in restoring price stability”. This being said, the long-awaited relaxation of interest rates may be on the horizon, as the Fed has signaled the possibility of three rate cuts in 2024. Only time will tell if this ultimately
comes to fruition from a central bank that has been resoundingly hawkish over the past (almost) 2 years. Ok, back to seasonality. As stated earlier, inventory and sales generally contract at this time of year as people shift their focus to buying presents rather than homes. In King County, there were 1,582 closed sales this November—a 14% decline from October that is in line with the usual month-over- month seasonal decrease of 15%. Closed sales were down 9% from one year ago and, in looking at sales year-to-date in 2023 versus 2022, the total count is down about 25%—a result more attributable to macro-ality (aka the macroeconomic environment) than to seasonality. A similar narrative developed on the supply side of the market, where the number of homes for sale in King County reached 2,819—a 17% decline month-over-month that was right on par with the typical contraction we observe between Octobers and Novembers. Notably, the number of homes for sale in November was, in fact, down 23% compared to one year ago. Understandably, there have been limited new listings hitting the market in
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