By July 2022, Montgomery County’s real estate market was in the middle of a real turning point. After a multi-year run of record prices and record sales, the numbers finally started bending the other way: listing inventory was climbing, home sales were dropping fast, and rising interest rates plus broader economic pressure were starting to show up directly in the local data. Inventory in the county was up 8.69% year over year, while total home sales had fallen 27.7% compared to July 2021. But the county-wide numbers only told part of the story. Two zip codes just miles apart were moving in almost opposite directions — one still running hot, the other cooling off hard. I want to walk back through what those summer 2022 numbers actually showed, because they’re a useful case study in why “how’s the market doing” almost never has a single answer.
What was happening in the Montgomery County market in summer 2022?
The market was shifting from scorching hot to mixed, with some pockets still hot, some reasonably active, and others outright cooling. In July 2022 there were 1,339 homes on the market in Montgomery County, up from 1,232 at the same point in 2021 — an 8.69% increase in inventory. At the same time, total home sales for the month came in at 1,069, down from 1,516 in July 2021, a drop of 27.7%. That combination — more homes for sale, fewer of them selling — is the clearest early signal that a seller’s market is starting to lose steam.
What is the absorption rate and why does it matter?
The absorption rate is the relationship between how much inventory is on the market and how many homes are actually selling, and it’s the single number I lean on most when I’m advising buyers and sellers. You calculate it by dividing current inventory by recent sales. The lower that ratio, the hotter the market; the higher it climbs, the slower things are moving. In July 2022, Montgomery County was sitting at roughly one sale for every 1.22 homes on the market, which works out to about a five-week supply of inventory. Compare that to July 2021, when the same math produced only a three-week supply. That jump from three weeks to five weeks in a single year is exactly what a cooling market looks like in the data, even before prices themselves show it.
Why did the 20878 zip code (Gaithersburg/North Potomac/Darnestown) hold up better?
The 20878 zip code — covering western Gaithersburg, North Potomac, and parts of Darnestown — was outperforming the county overall, even though it wasn’t immune to the slowdown. Sales dropped from 111 in July 2021 to 81 in July 2022, a 27% decline that roughly matched the county trend. But inventory in this zip code actually fell too, from 91 homes to 68, a 25.7% drop. Because both sides of the equation moved down together, the absorption rate held steady at a three-week supply in both years. That’s the key difference: 20878 didn’t get flooded with new listings the way other parts of the county did, so even with fewer buyers in the market, it stayed noticeably tighter than the county average of a five-week supply.
Why did the 20871 zip code (Clarksburg) cool off so much faster?
Clarksburg, covered by the 20871 zip code, showed the steepest slowdown of any area I looked at that summer. Home sales fell from 62 in July 2021 to just 26 in July 2022 — a 58% drop. At the same time, inventory exploded from 26 homes on the market to 63, a 142% increase. Run those two numbers through the absorption rate and the shift becomes dramatic: Clarksburg went from a 10-day supply of inventory in July 2021, which is about as hot as a market gets, to roughly a two-and-a-half-month supply one year later. That is a massive swing in a short window, and it was still getting larger month over month at the time.
What did this mean for buyers and sellers at the time?
It meant location-specific advice mattered more than ever, because a single county-wide statistic could hide two very different local markets. When someone asked me “how’s the market,” I couldn’t give a real answer without knowing their zip code, price point, whether they were inside or outside the Beltway, and even school district — all of those factors were driving noticeably different absorption rates within the same county. My outlook for Q4 2022 was for inventory to keep growing, for sales to tick up briefly after Labor Day before tapering again toward the holidays, and for a real, noticeable correction to take hold — without expecting a crash. For anyone weighing whether it was a good time to buy, my answer then was the same one I still give: real estate values trend up over the long haul, but “long haul” needs to mean at least five years, and ideally closer to ten. Buying with a one- or two-year exit plan in a shifting market like this one was too risky; buying with a long-term horizon, where you build equity and can even rent the property out if your plans change, still made sense.
If you want to see how current Montgomery County numbers compare to this summer 2022 snapshot, check ourlocal market stats, and for national context on inventory and sales trends, theNAR research and statistics pageis a solid resource. If you’re weighing a move in today’s market,get in touchand we can look at your specific zip code together.
FAQ
Was Montgomery County heading into a housing crash in 2022?
No. Based on what the data showed at the time, this looked like a correction — rising inventory and slowing sales — not a crash. Prices don’t need to fall sharply for a market to shift from a seller’s market toward more balance.
Why did some zip codes cool faster than others?
It comes down to local supply and demand. Areas like Clarksburg saw a flood of new listing inventory hit at the same time sales slowed, which stretched the absorption rate out fast. Areas like 20878 saw inventory pull back along with sales, so the local market stayed tighter.
What is a “healthy” absorption rate?
There’s no single magic number, but generally under a month of supply favors sellers, and beyond two or three months starts favoring buyers. Montgomery County as a whole was sitting around five weeks in July 2022 — leaning toward balanced, with individual zip codes on either side of that line.
Is five to ten years really necessary before buying?
Real estate values trend upward over time, but not in a straight line every month or year. A short holding period exposes you to normal short-term dips. A five-to-ten-year (or longer) horizon gives you time to ride those out and build real equity.
Do I have to live in a home the whole time to make long-term ownership work?
No. If your circumstances change, you can rent the property out instead of selling. The long-term math still works as long as you’re not forced into a sale during a down cycle.
Closing Thoughts
Looking back, summer 2022 was the moment the Montgomery County market started telling two stories at once — a county-wide cooldown, and a handful of zip codes that barely blinked. That’s exactly why I break the numbers down block by block instead of leaning on one countywide headline. If you want that same zip-code-level read on today’s market, book time with me directly.
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