Spokane home prices remained remarkably steady in July 2023, dropping just 1% year-over-year across our local market. Meanwhile, overall sales velocity fell slightly over 20% compared to last year, with properties averaging 28 to 29 days on market. High buyer demand and tight housing inventory continue to keep local property values firmly supported.
Pricing and Inventory Trends
Spokane home prices fell just 1% year-over-year in July 2023, showing solid stability despite higher interest rates. Closed sales velocity dropped a little over 20% compared to July 2022 as buyers adjusted to current borrowing costs. On top of that, homes are spending slightly more time on the market, averaging 28 to 29 days. However, that pace remains very fast when you consider that local homes averaged 90 to 100 days on market 12 years ago. Nationally, new housing starts jumped 25% to 27%, bringing total inventory to roughly 1.7 million homes. Even so, builders must sustain that pace every month for five years straight just to meet today’s demand. Local Spokane builders who slowed down late last year have ramped back up to full speed. So ongoing supply shortages will continue to protect local home values. You can compare these figures with our July 2023 Spokane Real Estate Update.
Mortgage Rate and Economic Context
Spokane mortgage interest rates hovered between 6.75% and 7.25% in July 2023, driven by persistent inflation data. Mike Hogan from Chimney Rock Mortgage joined Rich to explain why borrowing costs remain elevated. Year-over-year CPI inflation ticked up from 3.0% to 3.2%, largely because housing costs make up 90% of that index calculation. Meanwhile, month-over-month inflation stayed flat for five straight months. Financial markets look forward while the Federal Reserve looks backward. Because forward-looking bond markets drive mortgage rates, borrowing costs could drop sooner than the Fed cuts overnight rates. Plus, when we aren’t talking mortgages, Rich is predicting a 12-5 season for his 49ers while Mike is backing his Seahawks!
Advice for Home Sellers
Spokane home sellers continue to hold a clear advantage because inventory shortages prevent home values from dropping. Homes in Spokane sell in an average of 28 to 29 days, which remains well below historical norms. Because supply cannot keep up with buyer demand, sellers do not need to slash prices to land a buyer. In fact, total sales dropped over 20% mostly because buyers simply do not have enough listings to choose from. Setting an accurate price based on recent neighborhood sales and keeping your property in great condition will attract serious buyers quickly. To discover what your property is worth in today’s market, check out our Instant Spokane Home Valuation Tool.
Advice for Home Buyers
Buying a home in Spokane today prevents you from losing thousands of dollars in equity growth while waiting for interest rates to drop. Many buyers hesitate to purchase while mortgage rates hover in the 7% range. However, waiting for lower rates carries a massive hidden cost. At a historic average appreciation rate of 4%, a $400,000 home gains $16,000 in equity each year. If interest rates drop from 7% to 6%, you might save $200 a month—or $2,400 a year—on a $400,000 loan. So spending $2,400 in interest to gain $16,000 in equity is a smart financial move every single time. Mike bought his own home near the market peak in 2005. While values fluctuated temporarily, holding that house for 17 years built substantial wealth. You can buy the home now, build equity, and refinance when rates ease later.
Looking to buy or sell? Visit spokanehomeguy.com or call 509-990-SOLD (7653) to get started! You can also reach Mike Hogan at Chimney Rock Mortgage at 509-747-1300.
FAQ
Spokane home prices dropped just 1% year-over-year in July 2023, displaying strong price stability across local neighborhoods. Despite mortgage interest rates hovering near 7%, tight active inventory and steady buyer demand kept property values firm while closed sales velocity fell a little over 20% compared to July 2022.
Homes in Spokane took an average of 28 to 29 days to sell in July 2023. While this represents a slightly slower pace than the rapid sales of 2021, it remains significantly faster than historical Spokane averages of 90 to 100 days on market seen a decade ago.
Waiting for lower interest rates can cost you $15,000 or more per year in lost home equity growth. For example, a standard 4% annual appreciation on a $400,000 home yields $16,000 in equity, which far outweighs saving roughly $2,400 per year from a 1% interest rate drop.
Mortgage interest rates may drop sooner than the Federal Reserve cuts overnight rates because bond markets look forward rather than backward. While CPI inflation stayed around 3.2% due to housing costs, forward-looking financial markets drive mortgage pricing, potentially delivering rate relief before official Fed policy changes.
