Thursday, May 27, 2004

A flood of new homes for sale gave Washington-area buyers a little more selection in April, but the market remained unbelievably competitive.

The total number of new listings for the metropolitan area was 14,700 in April, up 18 percent over March’s 12,500. Despite such a huge increase in the number of available homes, April home sales were flat compared to March.

But inventory was the real story last month.

On April 30, 12,749 homes were available for purchase in the region. That’s 2,200 fewer than in April 2003, indicating the market has become even faster-moving than it was last year.

In March of this year, however, there were 2,000 more homes for sale than in March 2003 . In a slower market, this would be attributed to slow sales. When sales are slow, homes linger on the market, and inventory rises.

The problem with that theory is apparent to anyone who has bought or sold a home lately — this market is anything but slow, and homes are selling faster than ever throughout the region.

For example, homes were on the market for an average of 15 days in Arlington and Alexandria, down from 25 last year.

So why did inventory rise last month? The obvious explanation is that a lot of sellers entered the market. In Fairfax County, for instance, 3,200 homes were placed on the market in April, compared to only 2,500 in March. Every other area jurisdiction saw an increase in inventory last month. In most jurisdictions, new listings rose by 10 percent or more.

Why were so many people trying to sell their homes last month? Short of asking 15,000-odd people, we can make a couple of educated guesses. The strongest reason to sell today is home value. Homes have increased in value so dramatically that many people can’t resist the temptation to “cash out.” Many of those sellers pour their profits into another home, which just fuels the market further.

Interest rates provide another reason people might have put their homes on the market last month. Rates rose in April, which often has the effect of nudging people off the fence and into the market. Many sellers might have been motivated to sell before rates rose any more, which could dampen sales. And those same sellers, in turn, wanted to grab a good rate for their next home purchase.

Chris Sicks

The statistics in this story reflect a metropolitan 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; and the District.

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