Expert: Brace yourself for Virginia’s sharpest drop in home sales in over a decade

Virginia’s largest trade association has released its “2023 Economic & Housing Market Forecast” predicting what is ahead for the Commonwealth.

“Sales activity in Virginia’s housing market cooled significantly in 2022, and we’re on track to have our sharpest annual drop in closed sales in more than a decade,” says Virginia REALTORS® chief economist Ryan Price.

Price said that he expects the slowdown will continue in 2023, as higher interest rates will continue to stifle market activity.

“Even with the slower sales activity this year, prices continue to trend upward because of the limited supply. However, it’s likely that we will see price growth slow down in the coming year,” said Virginia REALTORS® 2022 president Denise Ramey.

Here are some additional findings in the market forecast:

• Total jobs in Virginia: In 2023, the forecast is for 0.3 percent more jobs to be added than in 2022 (approximately 13,000 jobs). As economic conditions continue to weaken nationally and here in Virginia, job growth will level out in 2023.
• Unemployment: Virginia’s unemployment rate is expected to rise in 2023, climbing to 3.5 percent by the end of the year, 0.7 percent higher than 2022.
• Home sales: Projections are for a decrease in sales in 2023, 2.5 percent lower than Virginia home sales in 2022. The market slowdown is being driven by rising mortgage rates, climbing prices and tight inventory conditions, all of which combined are leaving more buyers on the sidelines.
• Home prices: Predicts the 2023 median home price in Virginia to increase by 2.9 percent over 2022. While home prices will still see an upward trajectory in many markets around the state, the pace of growth will continue to ease in the coming year.
• New housing permits: Predictions are for a 3.6 percent reduction in new housing starts in Virginia in 2023. Demand for new homes has softened, and housing starts have dipped, a trend that will continue next year.
• Mortgage rates: It is expected that the 30-year fixed-rate mortgage rate will gradually recede to approximately 5.2 percent by December of 2023, down from where they are now.

For more details on the Virginia REALTORS® 2023 Economic & Housing Market Forecast, click here.