🌲 Western Washington Housing Market Update: A Slow Shift Toward Balance

As we move through the second half of 2025, signs are pointing to a housing market that’s slowly rebalancing. While we’re not heading into a boom, we’re also not bracing for a bust. Think of it as a slow, steady march toward balance — with better news ahead for buyers, but continued challenges too.

Here’s what’s happening in simple terms:

🏡 Affordability is Starting to Improve

Affordability in Western Washington has been stretched thin the past couple of years, but some relief may be on the way. Here’s why:

Mortgage Rates: Rates have dipped slightly after the July jobs report showed a cooling labor market. While still elevated, some forecasts expect 30-year fixed rates to land around 6.6% by year’s end, with the possibility of further drops if the Fed makes rate cuts later this year.
Home Prices: Prices are softening in many Western markets, especially where inventory is growing (hello, Snohomish and Pierce counties). More homes for sale means less competition — and less upward pressure on prices.
Incomes: Wage growth is slowing but still positive, which helps improve affordability compared to last year — even if things remain far less affordable than in early 2022.

While we won’t return to pre-pandemic affordability levels anytime soon, a slightly better buying environment may be around the corner.

🧍‍♀️Why Are Sales Still So Low? The “Locked-In” Effect

Most current homeowners have mortgage rates around 4% or lower. Swapping that for today’s higher rates is a tough pill to swallow — and that’s why so many are choosing not to sell. This has frozen much of the existing-home market.

Adding to the slowdown:

Fewer people are changing jobs, which usually triggers a move.
Many are nervous about the broader economy and holding off on major decisions.

Still, people are moving when life happens — think new babies, divorces, downsizing, or settling estates. These kinds of events will continue to drive local sales, even if activity stays below historical levels.

🛠️ New Construction is Still Going Strong (Kind Of)

Unlike the resale market, new homes remain a bright spot, thanks to builder incentives like rate buydowns and price cuts. But even here, cracks are starting to show.

Builder confidence remains cautious.
Material costs and growing competition from resale homes are starting to bite.
Sales might dip slightly below 2024 levels — but are still strong compared to pre-pandemic years like 2019.

If you’re in the market for a new home, builders may be more willing to negotiate as inventory builds.

📉 No Boom, No Bust — Just a New Cycle

What does all of this mean for buyers and sellers in Western Washington?

Buyers: The market is gradually shifting in your favor. Expect more choices, a bit more leverage, and potentially some rate relief by the end of the year.
Sellers: Homes that are well-priced and move-in ready will still sell — but don’t expect bidding wars to return across the board.
Everyone: We’re entering a more balanced phase of the market. It may not be exciting, but it’s stable — and that’s a good thing.

Final Thoughts

Western Washington real estate is still local, nuanced, and driven by personal life events just as much as by interest rates. We may not be in a “hot” market, but we are in a healthier one — slowly but surely.

If you’re thinking of buying or selling this year, now’s the time to start watching the market. Things are changing — and opportunities will follow.

🌲 Western Washington Housing Market Update: A Slow Shift Toward Balance