Higher Mortgage Rates To Slow NoVA Housing Market In 2023: Realtors

NORTHERN VIRGINIA — Fewer homes are expected to go on the market in Northern Virginia in 2023 as homeowners with low mortgage rates opt against financing a new house at a higher interest rate, according to the Northern Virginia Association of Realtors’ annual forecast.

In Northern Virginia, home prices are expected to rise only 1 percent or less in 2023, far below the projected average price increase in 2022. The average year-to-date sold price in 2022 through November was $755,250 in the region, a 5.7 increase over the full year 2021 average sold price of $714,208, according to NVAR data.

Nationally, home prices are expected to increase by only 0.3 percent, following a 9.6 percent increase in 2022.

“We are seeing the return of home inspections and appraisals instead of waiving those contingencies, only one or two competing offers on a home, rather than 12 offers; and homes selling for closer to their list price, instead of tens of thousands over list,” Casey Menish of Pearson Smith Realty, 2022 NVAR director and 2023 NVAR board of director’s secretary treasurer said in a statement.

NVAR produced its annual forecast in conjunction with George Mason University’s Center for Regional Analysis.

Terry Clower, director of George Mason University’s Center for Regional Analysis, said rising mortgage rates are depressing the residential real estate market in all Northern Virginia jurisdictions, a trend that is expected to continue through 2023.

NVAR represents Realtors in Fairfax County, Arlington County, City of Fairfax, City of Falls Church and City of Alexandria.

Two deviations from this trend are that the Fairfax County condominium market has had a slight uptick in units for sale and that sales of Arlington townhouses are expected to increase in 2023 because of the lack of single-family housing in the county, Clower said.

An additional reason for a housing market slowdown includes an uncertain economic outlook, according to NVAR.

“The rapid pace of home sales and rising prices in both the Northern Virginia and national housing market wasn’t sustainable,” Ryan McLaughlin, CEO of NVAR, said in a statement.

“A stable, more reasonably paced housing market is good for both Realtors and their clients—here and nationally,” McLaughlin said.

In Fairfax County, the sales prices for single family homes are expected to rise by 0.4 percent in 2023 and the total number of homes that sell is expected to drop by 9.7 percent compared to 2022, according to the NVAR forecast for 2023.

In Arlington County, overall affordability issues and mortgage rates are expected to soften the rate of price increases. The median prices for single-family home sales in Arlington are expected to rise by 3 percent, while the total number of single-family home sales in the county is expected to drop by 6 percent.

“New and existing residents will be challenged to find single family homes in Arlington,” NVAR said.

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