March was the best month for Washington-area home sales in nearly three years, as buyers got off the fence to take advantage of lower home prices and low mortgage interest rates.
Area Realtors recorded 8,439 sales contracts last month. That is the highest monthly sales tally we’ve seen since June 2006. Sales were 30 percent higher than they were in March 2008.
Much of the jump can be attributed to a sales increase of about 50 percent in Prince William, Spotsylvania, Prince George’s and Frederick counties. Sales fell sharply in these jurisdictions in 2007, which also caused home values to fall hard.
• To download a PDF of the chart, click here
However, there is a connection between that drop in prices during the past two years and the increase in sales we are seeing this year. These four counties, which experienced a sharper drop in home values than nearby areas, are also the counties experiencing the most significant sales rebound today. Buyers are drawn to good deals.
Prince William County has been attracting thousands of buyers for the past year because prices are so low. The median sales price there was just $168,000 last month. When you combine home prices like that with mortgage interest rates of 5 percent or less, you are sure to attract some buyer interest.
Much of the market’s future depends on those interest rates. Home prices are likely to flatten out. However, if interest rates climb in the coming months, as some predict, it could dampen the kind of buyer enthusiasm we saw last month.
Finally, to keep things in perspective, last month’s sales were only great compared to March 2008, as you’ll see in the charts. Sales were higher in 2005 and 2006. Still, the good news is that sales finally are headed in the right direction.
Contact Chris Sicks by e-mail (csicks@gmail.com).
Please read our comment policy before commenting.