by Calculated Risk on 10/20/2005 08:31:00 PM

Reuter reports: Washington home market softens as investors sell

After hitting a high in May, the number of contracts in Washington D.C. and its surrounding Virginia areas of Prince William, Loudoun, Fairfax and Arlington counties have fallen by about half, according to the Greater Capital Area Association of Realtors. Meanwhile, inventory of houses for sale has doubled and in some cases tripled, and homes are staying on the market 30 percent longer.

In Falls Church City, contracts peaked in April and inventory is double that seen in December.

Too many houses are for sale, experts said. Speculators -- who last year bought homes, not to live in, but to sell or "flip" within a year -- are trying to cash in on the price increases now. "For Sale" signs are sprouting on lawns and depressing prices throughout the market, analysts and Realtors said.

Next week, housing numbers for September will be reported, with Existing Home Sales on Tuesday, and New Homes Sales on Thursday. For New Homes I'm mostly interested in Sales (also inventory), but for Existing Homes, inventory continues to be the story.