Virginia seeing 'sluggish' housing market
RICHMOND, Va. (CBS19 NEWS) -- Virginia’s housing market looks to be cooling down, but the lack of inventory and the number of people looking to buy still pushed the median price for a home up slightly.
That’s according to the April 2023 Virginia REALTORS Home Sales Report, which shows that there was a 31.2 percent drop in home sales compared to April 2022.
The report says this is the slowest April market that has been seen in Virginia in more than a decade.
Even pending sales are much lower than last year, down 22.1 percent or more than 2.500 fewer new contracts.
Virginia REALTORS says this spring is not a typical one due to the decrease in sales for April, because there is usually a bump in sales between March and April.
Fewer people are listing their homes, with new listings declining by 28.5 percent compared to a year ago. The 2.9 percent decline in new listings between March and April is also considered an “unusual drop.”
On the other hand, the job market in the Commonwealth is still growing, with some 48,800 more jobs now than existed prior to the COVID-19 pandemic.
The state and national unemployment rates are at or near historical lows, with Virginia’s rate remaining flat at 3.2 percent for the third month in a row. Nationally, unemployment ticked down to 3.5 percent.
However, inflation and the resulting federal rate increases have put pressure on mortgage rates, which reached 6.43 percent at the end of April. By the third week of May, that had dipped slightly to 6.39 percent.
Virginia REALTORS says it is likely mortgage rates will continue to jump around for a while, but there is a longer-term trend that is expected to be downward.
The report says many people were able to refinance their homes with lower interest rates in 2020 and 2021, and now they have little incentive to sell, which is making the inventory conditions even tighter.
Due to supply constraints, the statewide median sales price increased by less than one percent, up to $391,000.
About half of of the counties had higher median sales prices in April, with the largest increases coming from parts of the Shenandoah Valley, the New River Valley and Williamsburg. Some of the largest declines in prices were from South Central Virginia, the Bristol area and parts of the Eastern Shore.
Sellers are also still getting a little more than their asking prices on average, due to the inventory constraints.
Meanwhile, homes are staying on the market for 29 days on average, which is 10 days faster than a year ago, but they are still selling relatively quickly in many parts of the Commonwealth.
Another number to be considered is the months of supply, which is calculated by taking the average of monthly sales over the preceding 12-month period and dividing that by the inventory of active listings.
At this time, there is only 1.6 months of supply in the market.
Virginia REALTORS says this current market is not really a “healthy” one due to the lack of inventory. Historically, a four to six-month supply has been considered indicative of a “healthy housing market,” but that has not been seen in the Commonwealth for more than five years.
To read the full report, click here.