- The Washington Times - Thursday, October 14, 2010

When the Washington-area housing market slowed in the spring, home sales weren’t the only things that dried up. The number of homes for sale also fell sharply.

The federal tax credits motivated a lot of folks to buy homes in the spring. Many of them also had a house to sell. The General Accounting Office reports that one-third of the tax credits have gone to move-up buyers - those who are selling one home and buying another.

That makes sense when you look at today’s charts, which show the number of homes listed with area Realtors. Looking at the January-through-August data for various jurisdictions, you can see listings generally are higher than they were in 2009.

The fever chart, however, shows the bulk of these additional listings are from the spring market.

April was the last month for buyers to get a contract on a home if they wanted to receive the tax credit. It’s no surprise, then, that more than 15,000 homes were listed for sale that month.

It’s also no surprise that listings plummeted to 10,316 in May. Without the tax credit to stimulate the market, everything slowed.

Now, what’s the big deal with listings? Why write a whole column about them? The thing is, whenever there are too many homes on the market, it puts downward pressure on home prices, something we’ve seen enough already.

While it’s encouraging that the number of listings in July and August were a little lower than for those months last year, sales in July were 20 percent lower than in 2009, and August was down 16 percent.

If sales remain low and listings don’t fall further, we aren’t going to have enough sales to absorb all those listings. As a result, unsold inventory would rise and the market would slow even more.

So, while it would be nice to see sales perk up, we also should hope for a drop in the number of listings.

Chris Sicks

Send e-mail to csicks@gmail.com.

The statistics in this story reflect a metro area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria, Va.; and the District.