Sales down 46 percent. Inventory up 29 percent. Read those two numbers on their own and you’d think Montgomery County’s housing market was falling apart heading into 2023. It wasn’t. December 2021 closed out with 1,250 home sales countywide during an unsustainable, once-in-a-generation frenzy. December 2022 closed with 669 sales, and inventory climbed from 590 homes on the market to 763. Scary on the surface. But raw sales and raw inventory numbers only tell half the story. What actually defines a market is the relationship between the two - how much inventory is available relative to how fast it’s moving, known as the absorption rate. When I ran that math for Montgomery County, the picture looked a lot less like a crash and a lot more like a market resetting from an abnormal high back toward something more normal, while still firmly favoring sellers.
Was Montgomery County’s 2023 housing market actually crashing?
No - the raw numbers looked dramatic, but the underlying supply-and-demand math said otherwise. December 2021 had an almost unheard-of two-week supply of inventory, a level that was never sustainable long-term. By the end of December 2022, that grew to roughly four and a half to five weeks of supply. That’s real growth in available homes, but historically speaking, it’s still razor-thin. Most economists and real estate experts consider a three-month supply the line for a balanced market. Anything above three months tilts toward buyers, and anything below tilts toward sellers. At four to five weeks, Montgomery County was nowhere close to buyer’s-market territory. It had cooled from an extreme high, not collapsed into a downturn.
Why did home sales drop 46 percent in December 2022?
The drop reflected a market correcting off historic highs, not a market breaking down. 2021 was fueled by rock-bottom interest rates and pandemic-driven urgency that pushed sales volume to levels the county had rarely seen. When rates rose sharply through 2022, that pace was never going to hold. Comparing December 2022 to December 2021 makes the decline look catastrophic because the baseline itself was abnormal. Measured against a typical, pre-2021 December, the falloff reads very differently - more like a return to normal than a market in trouble.
What does “months of supply” actually tell buyers and sellers?
It tells you who holds the leverage in negotiations right now. Absorption rate is calculated by dividing current inventory by the pace of monthly sales, and it’s the single best gauge of whether a market favors buyers or sellers - better than sales counts or listing counts on their own. With four to five weeks of supply at the end of 2022, Montgomery County remained a market that heavily favored home sellers, even after a year of rising rates and slowing sales. That said, “favors sellers” doesn’t mean uniform. In one recent deal, we negotiated $33,000 off a seller’s list price plus $15,000 in closing cost credits - $48,000 saved for our buyer. In the same period, most of our other 2023 transactions were multiple-offer situations that closed above list price. This is not a one-size-fits-all market. Every property, price point, and condition tells its own story.
Are interest rates going to keep pushing this market down?
I don’t think so - my read is we already saw the worst of it in Q3 and Q4 of 2022. Rates climbed fast last year and shocked a lot of buyers out of the market temporarily. Since then, rates have eased and settled into the 6 percent range, which looks to be the new normal rather than a temporary dip. That’s already pulled new buyers in, along with some who paused their search in 2022 and are now coming back. The one drag on inventory: homeowners sitting on 2.75-3 percent mortgages are reluctant to trade that rate for something double, which keeps some sellers on the sidelines and keeps supply tighter than it would otherwise be.
Should buyers and sellers expect prices to rise or fall in Montgomery County?
Expect modest appreciation, not the explosive gains of 2020-2021 and not a decline either. The combination of tight-by-historical-standards inventory and sellers holding onto low rates means demand still outpaces what’s coming to market. That supports gradual price growth rather than a spike or a drop. I’d also point out that most of the “doom and gloom” narrative around real estate is driven by national headlines built for clicks. Real estate is always local, and while I’d never call the DC area recession-proof, this market is better insulated than roughly 90 to 95 percent of the country. For the full county-wide numbers behind this breakdown, you can check ourstats page, and NAR’s ownresearch and statisticsconfirm the national pattern of rising rates cooling sales volume while inventory remains historically low.
FAQ
Is Montgomery County, MD a buyer’s or seller’s market right now?
Based on the four-to-five-week supply of inventory at the end of 2022, it’s a seller’s market. A three-month supply is considered balanced, so we’re well below that threshold.
Why did home sales drop so much if it’s still a seller’s market?
Sales volume dropped mainly because interest rates rose fast, pricing some buyers out temporarily and slowing the pace of transactions - not because demand for homes disappeared.
Will home prices in Montgomery County crash in 2023?
Nothing in the inventory-to-sales relationship suggests a crash. Modest appreciation is the more likely outcome given how tight supply remains historically.
Is now a good time to relocate to or within Montgomery County?
Yes, with the right strategy. Whether you’re relocating in, out, or within the county, conditions vary property by property - see ourrelocation guidefor what to expect.
Should I wait for rates to drop further before buying?
I wouldn’t count on a return to 3 percent rates. Six percent looks like the new normal, and waiting could mean competing with more buyers if rates ease further and demand increases.
Every market cycle brings its own version of “the sky is falling” headlines. My job is to pull the actual numbers for Montgomery County and tell you straight what they mean for your specific situation, whether you’re buying, selling, or both. If you have questions about buying, selling, or relocating to Montgomery County, Maryland, reach out through mycontact page- I’d rather give you the real picture than a scary headline.
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Sources and next steps
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Contextual links for this video
Kevin site links:home selling guide;home buying guide;Montgomery County relocation guide;market stats;California to Maryland: The Honest Truth About Relocating to Montgomery County.
Outside research links for this video:Visit Montgomery travel guide;Visit Montgomery restaurants;Google Maps restaurants near Montgomery County;Reddit discussion search for this topic;Google context search for this video.
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