Is the housing market in the nation’s capital changing? Data from Altos indicates that the dynamics in Washington have shifted since the start of Trump’s second term.
Currently, housing supply in Washington is increasing rapidly. After years of stagnant inventory, the weekly average of homes for sale has risen by 34.8% year over year, with new listings spiking by 9.3% on a 90-day rolling basis.
Although new listings typically increase every spring, the significant uptick is notable given that they were down by 10.9% year over year in the last week of February. This rapid shift from negative to positive indicates a substantial increase in new listings compared to the previous year.
Despite the increase in options, buyers are not entering the market at the same rate as the rise in inventory. Pending new sales on a 90-day rolling basis have been negative on an annualized basis since February, following a strong finish to 2024.
In response, sellers have started reducing prices. The trend of listings receiving price reductions being higher than those with price increases has shifted this year.
In the fall of 2024, the yearly gain for listings with price increases was over 50%. It has now decreased by 23.7%, while the percentage of listings with price cuts has increased by 17.1%.
Could federal layoffs be impacting Washington’s housing market? It’s essential to consider the context and not jump to conclusions based on correlation.
Firstly, the rise in new listings and inventory is a seasonal trend present in many markets across the country, and sales are also increasing, albeit not as rapidly as in 2024.
Secondly, the extent of the impact of layoffs on the market is uncertain due to the unpredictable nature of federal agency statuses and workforce fluctuations.
Other factors, such as Trump’s tariff regime and market instability, may be prompting sellers to list quickly and buyers to hold off. Mortgage rates have also surged to 7%, impacting buyer decisions.
The notable difference in supply this time is the significant growth it has seen. Since late February, inventory in Washington, D.C., has increased by 42%, compared to 22% in the same period last year. New listings have surged by 81% this year, up from 54% growth in 2024.
Conversely, new pending home sales have risen by 43.4% since late February, a decrease from the 48.9% figure in 2024.
Given the rapid changes, it may take until summer before the impact of new federal policies and workforce reductions is evident in the data. Currently, the housing market in D.C. is seeing a rise in supply that is outpacing demand.