New normal? Seattle housing market shows signs of seasonal cooldown although inventory remains tight

Seattle's booming housing market continued to show minuscule signs of a seasonal slowdown last month, providing little, if any, relief to buyers according to Zillow's latest market report which examined nationwide housing trends in October.

The seasonal reprieve in the hot housing market began in September as prices began to stabilize from last year's record gains. For the Seattle metro, the new report found the typical home value was $695,058 in October, up 21.8% — or $124,712 — compared to the same time last year. The report also showed that home value appreciation has slowed since September and continued to slightly ease last month.

However, for-sale inventory remains historically low, and buyers have fewer options. Seattle experienced a 4.5% drop in inventory from September to October. Compared to this time last year, inventory is down 13.6% and many experts don't see it rising to pre-pandemic levels soon.

"Home buyers shopping this fall shouldn’t expect the same frenzied demand that triggered bidding wars on listings this spring and summer," said Zillow senior economist Jeff Tucker in a news release Thursday. "The normal seasonal slowdown of autumn has returned, when many families are busy with back-to-school activities and planning for the holidays. Buyers can expect less competition, meaning more time to decide on a house and the potential for prices to fall on listings."

Homes also remained on the market for slightly longer in October than previous months, showing a slight easing in competition that could continue into the winter months. The median time on the market for home listings in Seattle last month was seven days, up from six days in September. Nationwide, listings spent an average of 10 days on the market.

Zillow also noted that rent growth was slowing down across the country with only a 0.8% increase in price from September to October. In Seattle, typical rent reached $2,181 a month, up 13.9% from October 2020 but only a 0.2% increase from the previous month. While growth for rent appears to be decelerating, it is still "cooling off from an exceptionally hot starting temperature," according to the report.

While the housing market is showing signs of a fall slowdown, other experts predict that inventory in the Puget Sound region will remain limited through the spring of next year. New listings in Western Washington shrunk by 19% in October compared to the previous month, and the region only had 0.66 months of inventory. The region has not seen over a one-month supply of inventory since July 2020.

Along with seasonal changes, brokers with the Northwest Multiple Listing Service (NWMLS) reported sensing indecisiveness in buyers last month as many regional employers waver on a return date for in-person work. 

"We are approaching our seasonal low in inventory. Each year, as the year closes out, potential home sellers wait until the new year to put their homes on the market," said Frank Wilson, branch managing broker at John L. Scott Real Estate. "In reality, a home listed now will have higher viewership since the buyer pool has not gone down."