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Originally published November 8, 2006 at 12:00 AM | Page modified November 8, 2006 at 11:36 AM

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Home sales drop, not prices

Prospective homebuyers who've been frustrated by too much competition for too few homes — your time is now. But don't expect to find...

Seattle Times business reporter

Prospective homebuyers who've been frustrated by too much competition for too few homes — your time is now.

But don't expect to find widespread price breaks, because home prices are up.

In fact, after four months of either steady or slightly declining prices, King County's median single-family house price rose in October to $440,000, up from $425,000 in September.

The number of houses and condominiums for sale in the central Puget Sound region — King, Snohomish, Pierce and Kitsap counties — was up from 27 to 59 percent last month, compared with a year earlier, according to statistics released Tuesday by the Northwest Multiple Listing Service.

Increasing inventory is giving buyers more clout, said Lennox Scott, chairman and chief executive of John L. Scott Real Estate.

"We're adjusting from a frenzied market back down to a strong market," Scott said. "Buyers have selection."

Meanwhile, the number of sales signed last month declined 7.5 percent in Snohomish County, the region's smallest drop, and 16.5 percent in Pierce County, where sales dropped the most. The other counties' declines were in between.

Bob Melvey, assistant manager of Windermere's Ballard office and a 30-year sales veteran, gauges market strength by the "absorption rate." That's the number of sales in a given month divided by the number of homes for sale at the end of the month.

A 15 to 25 percent absorption rate means a balanced market favoring neither buyer nor seller. A higher rate favors the seller; one lower favors the buyer.

In King and Snohomish counties, the absorption rate favors the seller, according to Melvey's analysis, but is markedly down from earlier this year. It was above 60 percent in King County last spring; now it's more like 30 percent, although it's higher than that in some neighborhoods.

For Melvey's absorption rates by area, go to www.melvey.com and click on "market stats."

"I'm amazed the market was basically on steroids for as long as it was," Melvey said. "It makes sense it's going to have to take a rest. But even with this absorption rate, it's not as if the market has tanked and the sky is falling."

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That's particularly true with prices. Counties in the central Puget Sound region posted double-digit price increases, or close to that, last month for houses and condos combined.

In King County, for example, the median price of houses and condos hit $391,300 in October, compared with $355,000 the previous October. That's a 10.2 percent increase.

The median prices in Snohomish and Kitsap counties also rose slightly more than 10 percent, while Pierce County's was at 9.2 percent.

The real gain was in appreciation of King County condominiums. Compared with a year earlier, the median price of King County condos was up 20.8 percent to $259,700.

King County has just over a three-month supply of single-family homes (at the current sales pace), compared with a two-month supply a year ago.

It has slightly more than a two-month supply of condominiums, compared with just under 18 months last year at this time.

Nationwide, there was a seven-month supply of existing homes at the end of September, the most recent statistic from the National Association of Realtors.

Elizabeth Rhodes: erhodes@seattletimes.com

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