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Gig Harbor Real Estate | Early spring housing activity picks up steam

Almost like clockwork, home prices for a single-family home in the greater Gig Harbor area — spanning from the Purdy Bridge to the Narrows Bridge and including Fox Island — rose to a new record of $922,000 in March. The median sale price was up 0.8% from February and 6% in March 2024, when the median home price was $870,000. Home prices have inched up nearly every month since September 2023.

Market still mostly favors seller

As expected for early spring, homes for sale and pending and closed sales of single-family homes also rose in March and are each up from the same time last year. But they are still well below their levels in the years prior to the COVID-19 pandemic. Closed sales, for example, are up 40% from last March but are down 27% from March 2020. Homes for sale are up 18.5% from last year but are still down 41.1% from March 2020. We still have a long way to go to reach pre-pandemic transactional volume. 

With an increase in single-family homes for sale, one might think that the market is loosening a bit, making it easier to secure a good home. But with demand rising in lockstep with new listings, the market is still tight and, in most cases, favors the seller.

In fact, nearly 30% of the pending sales in March had multiple offers, signaling continued competition among buyers. Months of supply, a measure of supply and demand, is 1.6 months, up from 1.5 months last month but down from 1.7 months last year. Generally speaking, months of inventory are at their lowest points at the beginning of the year and highest in late summer.

However, not all home types are created equal, and there are segments of the market that are closer to a neutral market — neither a buyer’s nor seller’s market. For example, there are 3.3 months of inventory of condos and 3.5 months of inventory for waterfront homes. However, while the respective markets are more neutral, the best homes, if priced right, will still be competitive. 

The impact of the economy on mortgage rates home sales

With the steady drumbeat of economic news lately, navigating the mortgage market feels like trying to hit a moving target in the wind. Rates shift with every new headline. Tariffs, for example, tend to make investors nervous by adding uncertainty around inflation and economic policy. Each new tariff announcement can trigger a reaction in the bond market — and since mortgage rates are closely tied to bonds, they often move in response, either higher or lower.

Given this uncertainty, my buyers and sellers wonder whether now is the right time to make a move or if it’s better to wait until the market “settles down.” While no one can predict the future with certainty, history offers some context: home prices have generally risen over time, and mortgage rates typically don’t change meaningfully without significant shifts in the broader economy.

Understanding the factors that influence home prices and borrowing costs can help consumers make more informed decisions. Inflation, Federal Reserve policy, job growth, and housing supply all play a role in shaping both rates and prices.

When inflation runs high or the labor market is particularly strong, for example, the Fed may raise interest rates to cool the economy — a move that can push mortgage rates higher. Meanwhile, limited housing supply, like what we are currently seeing in the greater Gig Harbor area, tends to keep upward pressure on home prices, even when borrowing costs rise. Watching these trends offers valuable perspective beyond the day-to-day headlines.

A more than a century-old farmhouse on 3.19 acres in the heart of Gig Harbor is listed by Patrick Mercado of Properties NW for $895,000