DC Metro Begins 2011 with Jump in Pending Sales - Revised 2-22-2011

Rockville, MD –(February 22, 2011) – Revised data released by RealEstate Business Intelligence (RBI), an MRIS company, shows an increase of 10.6% in pending sales in the January 2011 Washington, DC metro area housing market. The RBI Pending Home Sales Index™ [Washington, DC Metro Area], is a two-year moving window on the housing market using pending sales and median sales price. The results include pending sales through and including January 2011.  The market area includes: Washington, DC, Montgomery County, Prince George’s County, Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City.

“The RBI Pending Home Sales Index^TM provides unique insight into the state of the current housing market by measuring the number of pending sales through the most recent month,” says noted real estate expert and RBI/MRIS analyst Jonathan Miller.  “The median sold price, which has an advantage over average sales price because it removes outliers, is provided to show the relationship between signed contract activity and prices.  The current index shows a gain in both metrics which is promising news for sellers due to the increase in activity, and a positive trend for buyers, as pending sales is a leading indicator of confidence in the market. ”

Based on the data released by RBI, Miller sees five distinct market trends in the Washington, DC Metro area.  According to Miller:

• Pending home sales swell as impact of tax credit expiration last April weakens. The first month of the year began with the most signed contracts for January in three years as a more normal pattern of sales began to emerge.  There were 3,570 signed contracts in January 2011, up 10.6% from January 2010, and 12.9% above December 2010.  For perspective, there were 42% more sales this January compared to the “dark days” that followed the credit crunch in January 2009.
• Median sales price increased due to a more normal mix of sales.  The median sold price was $315,000 in January 2011, an 8.6% increase from $290,000 in January 2010, and 2.3% above $307,800 in the same period two years ago.  Throughout 2009, and the first half of 2010, the market experienced an unusually elevated period of activity as a result of the federal homebuyers tax credit. The increase in median sales price is attributable to reduced activity of first time buyers who are no longer incentivized by a tax credit.

• While active inventory increased from the same period last year, fewer new listings were added to inventory.   There were 13,545 active listings at the end of January 2011, an increase of 7.3% over the same period last year.  However, active listings remain 32.9% lower than two years ago in the months following the onset of the credit crunch at the end of 2008.  Despite the rise in active inventory, the amount of new listings added to the market over the same period declined 14.4% to 4,485.

• The rise in pending home sales outpaced the rise in active inventory.  The increase in pending home sales and rise in active inventory resulted in a slight drop in the monthly absorption rate to 3.8 months in January 2011, from 3.9 months one year ago, consistent with the 3.4 months average over the past decade.

• It took one week longer to sell a home in January 2011 than it did last year at this time.  The average days on market for January 2011 was 83 days, about a week longer than the same period last year and roughly a month longer than the 55 day average for the decade.

“One of the reasons RBI publishes pending home sales for the Washington, DC metro area is because no other available metric provides a better snapshot of the current state of the housing market.  The expiration of the tax credit last April had a significant impact on the market data,” states Miller. “It artificially increased sales activity before its expiration, and artificially lowered sales in the second half of 2010 after its expiration. For the first time in two years, pending home sales appear to be free of influence from the tax credit expiration as evidenced by the highest January pending sales total count in the three years after the housing market crisis began.

“While pending home sales are up, indicating an improving market, there is more inventory available than a year ago, and properties are still lingering on the market longer,” explains Miller.  “Now that the impact of the tax credit is essentially behind us, market stability seems to be the best way to characterize the Washington, DC metro area housing market.”

Special Note - THE 2-10-11 PRESS RELEASE WAS REVISED 2-22-11 TO INCLUDE LATEST HOUSING STATISTICS 

Jonathan Miller is available for comment on this month’s RBI data as well the RBI Pending Home Sales Index^TM.  Interview requests can be sent to Anne Hague at 301-838-7100oranne.hague@mris.net.