NoVA Home Sales Keep Falling On Low Inventory, Rising Mortgage Rates

NORTHERN VIRGINIA — Northern Virginia saw a nearly 5-percent decline in home sales in March compared to the same month in 2021 due to a low inventory of homes on the market and higher mortgage rates, according to the latest data from the Northern Virginia Association of Realtors.

The drop in the number of homes that sold in Northern Virginia tracked the national trend, where the decline in home sales was 4.5 percent in March from a year ago.

Sales activity in the NVAR region — Fairfax and Arlington counties and the cities of Alexandria, Fairfax and Falls Church — was the third month in a row of a decline in home sales.

Housing inventory was down almost 22 percent in Northern Virginia in March from a year ago, compared to a 9.5-percent decline on a nationwide basis.

Mortgage rates reached their highest level this week in more than a decade, CNN reported Thursday. The 30-year fixed-rate mortgage averaged 5.11 percent for the week ending April 21, up from 5 percent the week before. The last time rates reached this level was in April 2010 when they hit 5.21 percent, according to Freddie Mac.

“I expect that rapid price increases in homes will soften with escalating inflation and mortgage rates, but it’s unlikely that homes will lose value in our market. This means that affordability will continue to be a challenge,” Ryan McLaughlin, CEO of NVAR, said in a statement Friday.

Finding a solution to housing affordability in Northern Virginia is important to the “growth and vitality of our region,” McLaughlin said.

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Despite high mortgage rates, homes going on the market in Northern Virginia are selling quickly. Homes in the region sold in only 14 days on average in March, a decrease of 30 percent compared to March 2021 when homes took an average of 20 days to sell.

In the Northern Virginia region, the median home price was $650,000 in March, a 9.2-percent increase from a year earlier. The median price for homes nationwide was $375,300, up 15 percent from March 2021.

In March, 1,235 homes came on the market in Northern Virginia, versus 896 homes in February.

"The number of homes available between February and March increased a little under 25 percent, which feels like a big jump in inventory until you look at March 2021 and see that inventory is down almost 22 percent from the same time last year," Rob Traister, a Realtor and Associate Broker with RE/MAX 100, who is licensed in Virginia and Maryland.

The NVAR region currently has about two weeks of inventory, which means it will take about two weeks for all the homes currently available for sale to be under contract.

"To give that some context, if there's fewer than six months of inventory available, the market is weighted toward sellers. If there's more than six months of inventory, then we're in what is considered a buyers' market," Traister said.

Some market observers are making a connection between fewer home sales this year and the possibility of the market cooling.

"But when we look at the data, we see that fewer homes are selling because there are fewer homes available to buy," Traister said. "The stronger indicator is the average sales price of homes compared to last year, and that shows an increase of 12 percent over last year."

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