Washington Area Housing Prices Witness Small Dip

Monday, February 27, 2006

Washington area housing prices dipped in the fourth quarter, according to new data from the National Association of Realtors, though it's too soon to tell for sure whether prices are truly on the way down in a softening housing market.

The average existing single-family home sold for $432,900 in the region in the final three months of 2005. That's up from $359,000 in the comparable period of 2004, but it's down from an all-time high of $441,400 in the third quarter of 2005. The drop between the third and fourth quarters could signal that a rising supply of homes is pushing down prices. But there are other possibilities.

The data are not seasonally adjusted, so the drop could represent a normal sales slump with the onset of winter. Moreover, the existing-home-sales data can vary depending on what type of houses sell in a given period. If a lot of small houses change hands, the median sale price can fall even if the underlying housing market didn't change.

Caveats aside, it will be worth paying close attention to see whether the fourth quarter represents the beginning of the end for an eight-year boom in local housing prices. Homes are sitting on the market longer, and inventory has climbed. The other shoe, prices, may have dropped.

-- Neil Irwin

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