In 2023, a “Open House” sign is displayed outside a home in Washington, D.C. The supply of homes for sale in the U.S. typically increases before the busy spring market, with the Washington, D.C. metropolitan area experiencing a significant rise, as reported by Realtor.com. Inventory in the region, covering the District, Maryland, and Virginia suburbs, rose sharply in January and February, up by 35.9% and 41% year over year, respectively. From June to December, inventory levels were already 20% to 30% higher than the previous year, with further acceleration in recent months. Active listings last week were up by 56% compared to the same period a year ago.
Factors such as federal layoffs and funding cuts have likely impacted home searches in Washington D.C., both for those directly affected and for individuals concerned about the future, according to Danielle Hale, chief economist at Realtor.com. Nationally, active listings were up by 28% last week compared to the same time in 2024, coinciding with a decrease in mortgage rates from around 7.25% to 6.82%.
The increase in inventory in the D.C. area is not solely attributed to homes being put on the market. Although new listings saw a rise, it was significantly lower than the overall increase in inventory, indicating a combination of new listings and reduced buyer activity. New listings were 24% higher year over year last week, contributing to the increase in available inventory and leading to a decrease in median days on the market.
Furthermore, the uptick in inventory may also be due to newly constructed condominiums and townhomes entering the market. Construction activity in the D.C. region has been robust in recent years, with the share of new construction listings leaning more towards condos compared to five years ago.
Regarding prices, the median list price in the D.C. metro area was down by 1.6% year over year last week, while nationally, it declined by 0.2%. Adjusting for housing size, the median list price per square foot increased by 1.2% annually, suggesting more smaller or lower-end homes are available compared to the previous year.
Danielle Hale speculates that other federally employed markets may experience similar shifts in the near future. While many households may opt to stay and explore new job opportunities, some might choose to relocate, retire, or seek employment elsewhere.
