Here’s NVAR’s prediction for 2025 NoVa housing market

The Northern Virginia housing market will continue to strengthen in 2025, with moderate price increases and increased market activity, according to the Northern Virginia Association of Realtors’ 2025 regional housing market forecast, produced with George Mason University’s Center for Regional Analysis.

Examining the past year, Terry Clower, director of the Center for Regional Analysis and Northern Virginia chair and professor in George Mason’s Schar School of Policy and Government, said during an NVAR panel on Dec. 17, “The story of 2024 is going to be the market acclimating itself back to a more normal, [with] longer-term interest rates that are in that 6% band.”

NVAR’s predictions for the new year align with the National Association of Realtors, which believes that the worst of the housing shortage is ending as mortgage rates are stabilizing and job additions are continuing.

In 2025, most local markets within Northern Virginia will have more moderate price gains than in 2024, closer to 3%, NVAR and GMU-CRA predict, although tight markets like single-family homes inside the Beltway will see higher price increase rates.

Sales activity will increase and the region’s inventory will improve modestly, according to the forecast. Most market segments will have more homes for sale as buyers looking to move up in their housing will re-enter the market.

Stable mortgage rates will support higher sales levels, and the market will acclimate to higher but more historically normal mortgage rates, according to the forecast.

Some yet-to-be-determined factors could affect the region, such as President-elect Donald Trump and his incoming administration’s stated plans to cut the federal workforce and require federal workers to return to office full-time, but the timing and scale of changes weren’t yet clear at the time of the forecast’s release.

NVAR’s forecast includes predictions for the city of Alexandria and the counties of Fairfax, Arlington, Prince William, Loudoun and Stafford.

Fairfax County

In 2025, NVAR expects single-family home prices to rise 1.5% in Fairfax County. Single-family housing unit sales will increase 5.7% in 2025 compared with 2024, reversing the several-year trend of tightening inventories, according to the forecast.

Townhomes inventory will increase 6%. Strong demand for townhomes will likely continue into 2025, with the number of sales rising 2.9% and prices rising 3.9% compared with 2024.

The strong demand for townhomes is largely because in recent years, they’ve been relatively affordable compared with single-family homes.

As single-family homes become more expensive, and condo fees continue to rise, townhomes “become a sweet spot,” especially because they also often offer yards or outdoor spaces that condos don’t, NVAR’s 2024 president, Thai Hung Nguyen with Better Homes & Gardens Real Estate Premier, said during the Dec. 17 panel.

Condo prices will increase 3.5% from 2024, slightly slowing from the price increases seen in recent years. Inventory will increase 3.6% from 2024 to 2025 as demand for condos starts waning, according to the forecast.

Arlington County

The county’s single-family inventory will increase 1.8% from 2024 to 2025, according to the forecast. Total single-family home sales will decrease 6.5% compared with 2024, which represents only a difference of 4 units a month in the Arlington market.

NVAR forecasts demand for single-family homes will push prices up 5.3% in 2025, despite a slight inventory buildup and a decline in sales.

Because of the lack of available single-family homes, strong demand for townhomes in the county will push prices up 8.7% from 2024. NVAR predicts inventory will increase 4.3%, which represents an average increase of 1 unit at month’s end.

Condos in Arlington saw strong price increases in 2024, but affordability issues and potentially higher maintenance fees will soften price increases to 1.6% in 2025, according to the forecast. Condo sales will effectively remain flat as demand slightly softens. Arlington will have a small increase in inventory, averaging about 3.6% from 2024.

Alexandria

The median price of single-family homes in Alexandria will jump 9.9% in 2025, due at least somewhat to return-to-office policies. NVAR predicts the number of sales will shrink more, with just 285 sales in 2025, down 4.7% from 2024.

Prices in the city’s townhome market will increase 3.9% from 2024. Inventory will increase year-over-year an average of 5.2% because of price increases for potential sellers and buyers acclimating to higher mortgage rates.

According to the forecast, Alexandria condo prices will rise 1.5% in 2025, with slightly higher inventory and flattening unit sales.

Prince William County

In 2025, Prince William County will remain an attractive market for single-family homes, according to NVAR, with prices rising 3.5% but remaining relatively affordable compared with other markets in the region. The tight inventory will effectively remain the same, and total sales will drop by 35 units — 1% — from 2024 to 2025.

Townhome prices will increase 4% as families continue to seek more affordable housing. “The key market factor is being outside the core, but still a reasonable commute — reasonable by Northern Virginia standards,” according to NVAR’s forecast. Year-over-year inventory will increase 5% on average, following several years of declining inventory.

The forecast predicts condo prices will increase 6.2%, and year-over-year sales and the average year-over-year month-end inventory will increase 6%.

Loudoun County

Single-family home price increases will continue into 2025 in Loudoun County, with a 5.5% increase in 2025. Strong demand will push the number of sales up 4% from 2024 and will decrease month-end inventory by 1% on average, according to the forecast.

Townhome prices will rise 3.8% to a median of $710,936 due to strong demand. NVAR predicts inventory will drop 3%, with unit sales increasing 1% from 2024.

Loudoun condo prices, too, will rise, increasing 8.1% over 2025. Inventory will stay nearly flat while condo sales increase 2%, equating to about 20 more sales in 2025.

Stafford County

Single-family homes in the county will increase 4.5%, slowing modestly from the price gains of recent years. Home sales will rise 2.2% to 1,495 units in 2025, with a 2.5% increase in average month-end inventories, according to the forecast.

NVAR predicts Stafford townhome price increases will remain strong, increasing 3.5% in 2025, with unit sales increasing 1.9% and inventory rising 3.7%.

Condo prices will increase 3.9%, according to the forecast, but Stafford’s condo market is young, and only 89 units will sell in 2025.

In sum, “it’s going to be an improving market,” Clower said. “There’s going to be some modest increases in inventory overall. There will be, therefore, more sales, because whatever is on the market is going to sell — that dynamic hasn’t changed. …

“We will see some price escalation,” he said, but it will be constrained by mortgage rates and affordability issues.