Housing prices keep rising as sales slow

It may surprise real-estate watchers, but slower months for home sales can still have significant price increases, particularly when buyers have fewer homes to choose from.

That's what happened last month, as offers to buy King County homes fell from the record-breaking December 2004 and prices for closed sales climbed about 17 percent compared to a year earlier.

"It was the second-best December ever," said Matt Deasy, an associate broker in several Eastside Windermere offices.

Despite the slower December, real-estate experts say there is no sign the robust market is souring.

"The market is still plenty strong," Deasy said.

The residential real-estate market typically slows at the end of the year as buyers and sellers take a break for the holidays. Normal December sales are expected to be about two-thirds that year's monthly average, Deasy said, so the drop in sales was no surprise.

Statistics released Thursday by the Northwest Multiple Listing Service show that King County buyers made 2,392 offers to buy detached homes or condominiums last month, down almost 8 percent from the previous record-breaking December. At the same time, buyers had 11 percent fewer properties to choose from, which kept prices high.

It's all about supply and demand — a limited supply of buildable land and continued strong demand for homes, said Gary O'Leyar, broker and owner of North Seattle's Prudential Signature Properties.

For sales that closed last month, King County's median price for a single-family home was $393,000; for condominiums it was $222,990. Taken together, that represents a 17 percent price increase from the previous year. (Median means half the properties sell for more, half for less.)

Demand is being fueled by strong local job growth and hasn't been seriously hurt by rising interest rates, which were at 6.27 percent Thursday for a 30-year, fixed-rate mortgage in Seattle, according to HSH Associates, a mortgage-information provider based in New Jersey. Buyers can get 15-year and adjustable-rate loans at less than 6 percent interest.

Land availability likely also played a part in driving up sales prices in Snohomish and Pierce counties last month, O'Leyar said. In both counties, single-family homes are far more prevalent than condos (in King County, condos account for a quarter of all sales).

Last month Pierce County saw an 18.38 percent rise in the number of single-family homes for sale, compared with a year earlier. "There's a lot of very robust construction business down there, and you have to take that into consideration," O'Leyar said.

That county's median price was $254,000, making it the most affordable of the four within central Puget Sound. The area also includes King, Kitsap and Snohomish counties. In Snohomish County, land for new-home demand is toward Marysville.

Snohomish County saw a 4 percent drop in the number of single-family houses for sale last month, and a 14 percent drop in the number of accepted offers to buy, compared with a year earlier. The number of closed sales fell 11.6 percent, while the median price climbed 23 percent to $319,950.

O'Leyar and Deasy say they expect home sales to cool slightly this year.

"That's predictable because it's never static," O'Leyar said. "I don't think anyone who follows the market would say we'll continue to see unending double-digit appreciation."

Deasy said, "2005 was the high point. 2006 will be either the second- or third-best year in terms of homes sold."

That means, he said, sellers should get their homes ready to put on the market. "The buyers are there right now."

Elizabeth Rhodes: erhodes@seattletimes.com