- - Thursday, October 25, 2012

An area newspaper recently ran a story with this misleading headline: “Washington DC area housing market appears to be cooling.”

That doesn’t sound good, does it? Don’t worry — it’s simply the result of someone not understanding how the housing market works.

Here’s the truth: Our housing market has been improving steadily for a few years now, and that did not change when September data came out.

September sales were 8 percent lower than August’s, which is what inspired that headline. But it’s not news, and it’s not a sign of a cooling market. My data goes back 22 years, and September is slower than August every single year, without exception.

The market slowed in September for the same reasons it does every year: Students are back in school, Congress is back in session, and people don’t feel like moving.

The market will continue to slow until it picks up again in January. It’s just the normal pattern of the Washington housing market. You can see it clearly in the bottom chart. Spring is always busiest. Fall and winter are always slowest.

Here’s some real news: Last month’s sales were 11 percent higher than September 2011, and the inventory of unsold homes was down by an amazing 30 percent.

These two statistics are the reason I can say with confidence that the market does not “appear to be cooling.”

September’s sales chances were 37 percent. That’s a dramatic jump from 23 percent in September 2011 and 18 percent in September 2010.

Sales chances are calculated by dividing a month’s sales figures by the inventory on the last day of the month, resulting in a percentage. A figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.

With the highest sales chances since 2004, September was not a cool month at all. It was a seller’s market in most jurisdictions and further proof that the Washington area has emerged from the housing slump ahead of many other cities.

Send email to csicks@gmail.com.

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