2023 housing market off to slow start

Virginia home sales were off to a slow start in 2023, with a 30% decline in January from a year ago, or 2,454 fewer sales, according to data released in February by Virginia Realtors. 

Across the state, 5,609 homes were sold, marking the slowest January that Virginia has seen in eight years. Fewer sales have also resulted in fewer sales volume. Compared to a year ago, there has been $1 billion less, or a 28.5% decline for a total of $2.4 billion. 

The slowdown is being felt most in the state’s largest housing markets — Northern Virginia, Hampton Roads and Richmond, said Ryan Price, chief economist with Virginia Realtors. Price added that the slowdown is still “pretty uniform” around the state, compared to what it was a year ago. 

The sharpest drops were in the Shenandoah Valley market, parts of Central Virginia, the Lynchburg region and the Williamsburg area, according to the report.

It’s still a seller’s market, he noted, but not as intense as it was a few months ago, and the market is shifting to favor buyers. 

Sales levels are down, with fewer contracts overall in January and homes are staying on the market longer, according to Virginia Realtors. 

The statewide median sales price was $350,000, up 3.7% from a year ago, and an increase of $12,500. Last month, 45.6% of the homes sold were priced between $200,001 to $400,000, down from 45.9% last year. One out of every five homes were in the higher price points of $400,001 to $600,000, and about 15% sold for less than $200,000. Nearly 8% of homes sold in January were more than $800,000. 

Homes are staying on the market longer, an average of 39 days, which is about a week longer than in January 2022. Pending sales are also down. But inventory is up about 22% from a year ago and has been increasing for four straight months. It’s still low compared to historical averages, though.

Price said inventory is constrained, but improving, and there are more listings, not necessarily new ones. Homes are taking longer to sell, allowing inventory to build up. Buyers frustrated by the lack of inventory will start to see more options. 

However, he noted that it’s still challenging for first-time buyers because of the lack of inventory and pricing trends.

It’s not all bad news, though. 

“We are gearing up for the spring season, which typically is one of the busier times of the year for the housing market,” Price said.