What gives? Local home-sales market is softening, but prices keep rising

When home sales are transitioning from hot to less than rip roaring, the market sends out mixed, sometimes seemingly illogical, signals.

That's exactly what happened last month in every Puget Sound county.

Compared with a year earlier, the number of homes for sale was up by 40 percent or more.

Pending sales — deals signed last month but not yet completed — were down from 2 to 25 percent depending on the county.

Yet prices continued to increase, according to May sales figures released today by the Northwest Multiple Listing Service.

Why would prices still climb when logic says they shouldn't?

Glenn Crellin, director of the Center for Real Estate Research at Washington State University, suspects it's because in a softening market, when there's more to choose from, "buyers are buying more house." That will raise the median price paid, he said.

Last month the median sales price of King County's single-family homes hit $469,000,up 9.6 percent compared with the previous May and the highest price this year. Yet there were 44 percent more houses to choose from than a year earlier, and buyers made 9.5 percent fewer offers.

Crellin explains it this way:

Still believing their homes are worth top dollar, sellers price them at that level. But buyers know the market is softening, so they feel free to shop around. Sales slow, and as even more houses come on the market — which is typical in springtime — inventory increases.

Finally, sellers either cut their listing price or agree to take less. Buyers, realizing they can get more house than they thought, stretch their price range to buy up. That makes prices rise, Crellin explained.

But Michael Tenore, area director and broker for ZipRealty, cautioned that the buildup in inventory is uneven. Those areas farther from freeways and job concentrations are experiencing the biggest buildup.

"It's by pockets, by neighborhoods," Tenore said. "When you're working with a client you have to educate them that depending on where they're looking, there will be one area with a lot of inventory, and the buyer may have a little more control. And in another area, there is very little to look at, and the seller is more in control."

Thus, "you can't make one gross generalization right now that there are more listings or fewer listings," said Tenore.

Other factors also influence whether homes sell quickly or not.

Windermere agent Carole Alexander just had a South Seattle home she listed sell in three days for more than its asking price of $419,000.

Meanwhile, another house Alexander is marketing nearby has been on the market for more than a month, had its nearly million-dollar price reduced $100,000 and has yet to sell.

Alexander says the first home sold quickly because its price was at the low end for single-family homes in its area. The second home's décor may be stopping buyers literally at the door.

King County's condominium sales are showing more strength than house sales.

Last month, pending sales were off 1.8 percent, compared with houses, which were off 9.5 percent.

Condo prices also outperformed house prices in King County, rising 17.6 percent, compared with houses' 9.6 percent.

Last month, 28 percent of all homes sold in King County were condos. They accounted for 34 percent within Seattle.

Elsewhere, the median price of Snohomish County's single-family homes was $375,808 last month, up 8.9 percent compared with the previous May. Its median condo price was $239,950, up 18percent.

Pierce County's median single-family price was $284,950, a 7.5 percent increase. Its condo median was $226,490, up 7.3 percent.

Elizabeth Rhodes: erhodes@seattletimes.com