Surging housing inventory combined with buyers backing out have normalized the market
Due to downsizings in the federal government, the Washington, DC housing market has seen a major influx of housing inventory. In other parts of the country, an increase in housing inventory has turned several regions into buyer’s markets. Sellers are offering concessions to sell their houses.
Kristi Hardy (pictured top) is an executive vice president, area manager, and senior loan officer with Atlantic Coast Mortgage. She said that while market conditions have changed in the nation’s capital, it hasn’t reached buyer’s market status just yet.
“Inventory is up sharply, I think it's up 50% to 90% year over year from where it was,” Hardy told Mortgage Professional America. “But that being said, it's still not too much. We have had such a drastic shortage of inventory that it's been rough. It’s been almost impossible as a first-time home buyer to buy a house because of multiple offers and people bidding well over the asking price.
“I had one this spring that was $120,000 over. Still didn't win. So even though it sounds like we have this huge influx of inventory, which we do, it's still not enough to meet the demand. I think our housing market is still extremely strong.”
Numbers released from Redfin last week noted a 22.7% increase in housing supply in the market in June. This was the third highest jump on record, trailing only the two previous months. In April, supply rose 23.9% while in May it increased 25.5%.
Market is normalizing
After a severe lack of inventory for some time, the DC market is returning to more balanced housing levels. Hardy said even back in the Spring, there were dozens of offers on each house on the market.
“We definitely have seen a huge cooling period on that,” she said. “The well-priced homes are selling quickly, but there are not multiple offers on every property. It’s getting to be a more normalized market. I wouldn't quite call it a buyer's market just yet. I think it's very balanced.
According to Redfin, houses are staying on the market a little longer. In June, homes that went under contract did so in 36 days, compared to 26 days in June 2024. Hardy noted that it is becoming increasingly common for homes to remain on the market for over a month.
“Some houses are going to sell quickly,” she said. “ The average stays on the market is a little bit longer than it was. Houses are sitting on the market a little bit longer. But that's normal. What we've been experiencing these past few years has been a strong seller's market. It’s starting to level out some.”
Not only are homes staying on the market longer, but they’re selling closer to list price, which is another sign the market is normalizing.
“The houses are moving, and a lot of them are still selling at list price,” Hardy said. “I think I just saw something that said homes are typically selling for 100.2% of list price. So that's great, because last year, and even in the Spring, we were being over list price on a lot of stuff. I think it's just normalizing, which is really great.”
Broken contracts
One new trend in the market that Hardy has seen over the last few months is more buyers backing out of contracts.
“I don't know if it is exclusive to my market, but we are seeing a lot of people back out of their contracts,” she said. “That's something that's been happening this whole year. I do think that there are people backing out due to uncertainty.”
Between economic uncertainty, the potential for job loss, and elevated interest rates, buyers who start the homebuying process aren’t confident enough in what’s going on to finish the process of getting a new home. Hardy also thinks that buyers might not be convinced that they have the right house picked out.
“Backing out of the contract, for me, means they aren't in love with the house,” she said. “So that goes to the realtor, like, ‘Are you showing them the right house?’ Usually, if someone really wants the house, they will find a way to make it happen. I still encourage people to buy, then if rates do come down, we will refinance to the lower rate.
“But if rates come down, the prices are going to go back up. So, I'm still encouraging people to proceed and not to back out.”
Julie Harris, broker owner of Harris Mortgages of Idaho, says that with so many people waiting for a shift, a quarter-point rate cut would provide the "hope" needed to encourage buyers and sellers to step out.https://t.co/jgoJtpPtyT
— Mortgage Professional America Magazine (@MPAMagazineUS) August 4, 2025
Hardy cautions those waiting for a drop in interest rates that there could be a return to a seller’s market as soon as rates drop and buyers flood the market.
“The uncertainty with the tariffs and interest rates potentially coming lower,” Hardy said. “I do feel like some people are sitting on the sidelines waiting for interest rates to get lower. However, I do think once interest rates do come down, then there's going to be that surplus of buyers again. Then it's going to be a seller's market. Honestly, I think it's still a great time to be a buyer right now.”
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