Spokane active housing inventory climbed over 40% year-over-year in May 2023, giving buyers significantly more options even as overall sales fell 18.7%. Meanwhile, median home prices dropped about 8% compared to last May as higher borrowing costs slowed buyer demand. Here is our full breakdown of where the local housing market stands and what you can expect as we head into summer.
Pricing and Inventory Trends
Spokane active home inventory increased by over 40% year-over-year in May 2023, while median home prices dropped roughly 8% compared to May 2022. Total home sales fell 18.7% year-over-year as higher mortgage rates cooled overall buyer demand. On top of that, new listings entering the market dropped 16% compared to last year. Because buyer pace is slowing, inventory is finally catching up with demand. So if you are out shopping right now, you will notice more active listings sitting without immediate offers.
Mortgage Rate and Economic Context
Spokane mortgage interest rates hovered just under 7% in May 2023, remaining fairly stable compared to the peak rate of 7.37% seen in October 2022. Mortgage rates have held mostly steady for the past six to nine months, with FHA and conventional loans staying within 0.1% of national averages. Meanwhile, the Federal Reserve paused interest rate hikes at its June meeting as national inflation cooled to the 4.0% to 4.5% range. However, the Fed left the door open for up to two more rate increases later this year if inflation stays sticky. Plus, while national gas prices dropped, those of us filling up in Washington state know gas still isn’t cheap—you can thank whoever you want for that! So as inflation slowly trends down, we expect borrowing costs to stabilize further.
Advice for Home Sellers
Spokane home sellers must price competitively today because active inventory is up 40% and buyers have more choices than they had last year. With new listings down 16% year-over-year, overall supply remains tight, but slowing buyer speed means properties are sitting longer. As a result, buyers are no longer rushing into panic offers. If you plan to sell this summer, you need to account for increased local competition. Offering seller credits to help buyers lower their interest rates can make your listing stand out. To find out what your home is worth in today’s shifting market, check out our [LINK: Instant Spokane Home Valuation Tool].
Advice for Home Buyers
Spokane home buyers can significantly lower their monthly payments in 2023 by using a seller-funded 2-1 mortgage rate buy-down. With inventory up 40% over last year, you have more time and homes to choose from without facing intense bidding wars. To tackle higher interest rates, ask the seller to contribute roughly 2.3% of the purchase price toward a 2-1 buy-down. This credit drops your mortgage rate by 2% in year one and 1% in year two. For example, if your base rate is 7%, you pay 5% the first year and 6% the second year. So you can buy the house now, date the rate, and refinance when rates drop down the road. You can compare this strategy to our previous insights in our [LINK: May 2023 Spokane Real Estate Update].
Looking to buy or sell? Visit spokanehomeguy.com or call 509-990-SOLD (7653) to get started! If you have mortgage questions or want to explore rate buy-downs, you can reach Todd Feniger at Catalyst Lending Team at 509-944-6206.
FAQ
Spokane median home prices dropped roughly 8% year-over-year in May 2023, while total closed sales fell 18.7%. Higher mortgage rates slowed buyer demand across the region. However, active inventory increased by over 40% compared to May 2022, giving active buyers more options to explore.
Spokane mortgage interest rates held steady just under 7% in May and June 2023. This is down slightly from peak rates of 7.37% seen in October 2022. Both FHA and conventional loan rates remained closely aligned within 0.1% of national averages.
A 2-1 rate buy-down uses a seller contribution of about 2.3% of the home price to temporarily reduce your mortgage rate. Your interest rate drops 2% below the note rate during the first year and 1% below during the second year, keeping initial monthly payments affordable.
Yes, active housing inventory in Spokane increased by more than 40% year-over-year in May 2023. Although new listings dropped 16% compared to May 2022, homes are taking longer to sell, allowing active inventory to accumulate and giving buyers more negotiating power.
