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Record home prices good for sellers, but may dampen D.C market

Some prospective purchasers already have moved to the sidelines

Despite a year-over-year uptick in sales and a new monthly record sales price, the Washington region’s homes market may be reaching an affordability crunch that could cause a weak summer sales period.

That’s one possibility posited by Bright MLS, the region’s multiple-listing service, in parsing April sales data.

“Affordability challenges could keep more buyers on the sidelines this summer,” chief economist Lisa Sturtevant said.

A decline in the number of home showings in April compared to a year before regionally and in many individual jurisdictions “indicates a weakening demand pool in the region,” she said.

Across the Washington area, total home-showings for April stood at 113,834, down 13.7 percent from a year before.

The only region to post an increase was the relatively small city of Falls Church, where market swings often depend on homes available.

In larger localities, figures were down – including drops of 10.1 percent in Fairfax County and 24 percent in Arlington.

But at least up to this point in the year, declines in showings (they are off 12.7 percent year-to-date) have not derailed sales prices. And pending sales, which usually translate to consummated transactions in a month or two, remain in positive territory year-over-year.

But with the median regional sales price ($640,000) in April at a new record, and with both single-family and townhome sectors setting all-time highs, there could be a looming inflection point waiting in the wings.

“Potential buyers may be waiting for rates to fall, or stepping away as affordability challenges only grow,” the Bright MLS analysis noted.

In April, there were 4,518 closed sales, up 7.4 percent from 4,207 a year before.  The $640,00 median sales price was up from $586,000 a year before.

Figures represent transactions in the District of Columbia; Arlington, Fairfax and Loudoun counties and the cities of Alexandria, Fairfax and Falls Church in Virginia; and Montgomery, Prince George’s and Frederick counties in Maryland.

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