What will it take to get Thurston County home sales moving again?

The Thurston County housing market continues to find itself in an unusual spot: fewer homes are on the market, fewer homes are being sold and inventory is stuck right around one month, according to new May data released Monday by the Northwest Multiple Listing Service.

Why is this happening? A month of inventory is the same level the market experienced more than a year ago, largely because mortgage interest rates were low and demand was strong, a situation that created a market that strongly favored sellers over buyers.

Inventory that doesn’t favor either buyers or sellers is thought to be four to six months’s worth, but that level of inventory hasn’t been seen in years and doesn’t appear to be changing anytime soon.

This, despite the fact that home sales have slowed all year, including a drop of 31 percent last month to 319 homes from 463 in May 2022, the data show.

Windermere Olympia owner Steve Garrett thinks sales fell last month because there wasn’t enough inventory, particularly for those who currently own a home but would like to move to something different.

“That home is not out there,” he said.

Garrett believes there are a few things that could be holding inventory down.

▪ Potential sellers are unwilling to give up the low mortgage interest rate they currently have in favor of a higher rate. The current average 30-year fixed rate mortgage is 6.79 percent, according to Freddie Mac, but many homeowners who bought or refinanced in recent years have an interest rate between 2.5 percent and 3.5 percent.

▪ Buyers who bought when the median price began to shoot higher haven’t lived in their home long enough to build up enough equity to make a next purchase.

▪ The pace of new construction isn’t fast enough. More homes need to be built, Garrett said, but he acknowledged that takes time.

Van Dorm Realty managing broker Steve Pust also shared some thoughts about the state of inventory.

More homeowners might be motivated to sell if prices were to rise or inventory grew via a much harder route: a slow down in buyer activity because of a slower economy.

It also might be a matter of sellers and buyers acclimating in a year or two to a housing market that features higher mortgage interest rates, he said.

There are some silver linings in the May housing data, however.

Although fewer homes came to market last month (456) than in May 2022 (628), more homes came to market in May than in April (352).

And there was some good new for potential sellers: Windermere’s Garrett said homes listed at certain price points — say between $425,000 and $525,000 — are still attracting multiple offers.

The May data

▪ Single-family home sales fell 31 percent to 319 units last month from 463 units in May 2022.

▪ Single-family median price fell 3 percent to $504,000 from $520,000 over the same period.

▪ Single-family pending sales fell 25.5 percent to 436 units from 585 units over the same period.

▪ Condo sales fell to 10 units from 12 units over the same period.

▪ Condo median price rose 4.4 percent to $342,000 from $327,500 over the same period.

▪ Condo pending sales rose to 22 units from 15 units over the same period.

Source: Northwest MLS.