Virginia housing market saw late 2025 recovery as rates eased

After a slow 2025, Virginia’s housing market showed signs of a late-year recovery as mortgage rates eased and more homes hit the market.

Virginia Realtors Chief Economist Ryan Price says momentum emerged in the fall and continued into early this year. He notes that 2025 began with significant uncertainty in the job market across two of the state’s largest regions, Northern Virginia and Hampton Roads.

“While we didn’t see these markets drop off a cliff, we did see slower sales activity during the typical busy spring market amid the backdrop of the federal job cuts, which likely put a damper on the annual totals,” Price said in a January statement.

Ultimately, the state had 103,722 home sales in 2025, a 1.2% increase above the 2024 total of 102,515. The annual median sales price in Virginia rose to $425,000 in 2025, up 3.2% from 2024, marking the slowest rate of cost growth since 2018.

Price says the uptick at the end of the year was likely driven by interest rates, which began retreating in early September 2025, falling below 6.5% before declining even further. In January, rates for a 30-year fixed mortgage averaged 6.06%. The interest rate decrease, coupled with more listings on the market, led to more sales, Price says.

Outside of the housing market, data center growth continues in Virginia, as artificial intelligence use surges. Developers are looking beyond Loudoun County — which last year eliminated by-right uses on most available large land parcels — and shifting south along the I-95 corridor and west. Botetourt, Caroline and Louisa counties are among the forthcoming bases for massive data center projects announced last year.

A few years ago, developers rapidly added distribution warehouses to meet surging COVID-era demand of delivered goods. Demand cooled in 2023 and 2024, but industrial facility vacancy is still low due to the limited amount of shovel-ready land and because data center developers offer higher tax revenue for their projects, experts note.

Still, Richmond and Hampton Roads remain key logistics hubs for Virginia and points beyond. In September 2025, Amazon opened its 3.2 million-square-foot, highly automated fulfillment center in Virginia Beach, the second and final phase of a
$350 million expansion.

Meanwhile, construction is underway on the Lego Group’s $1 billion manufacturing facility on a 340-acre site in Chesterfield County. Last year, the company also began construction on a $366 million, 2 million-square-foot warehouse and distribution center in Prince George County. Both facilities are expected to open in 2027.

Looking ahead, Virginia Realtors expects overall home prices to continue rising this year, but the pace of growth to slow down. Deputy Chief Economist Sejal Naik notes that Virginia’s housing markets saw inventory growing due to more sellers and homes staying on the market longer. Naik expects these trends to continue in 2026 and for more new single-family homes to come online.

She also forecasts that mortgage rates will continue to slowly drift downward over the year, into the low 6% range. Naik notes that the labor market has been showing signs of weakness and that unemployment has been climbing, which will likely lead to one or two Federal Reserve rate cuts this year.

With more housing inventory, the association says the scales are tipping increasingly in favor of buyers, giving them more options.

“Interested buyers have had longer to save up for their next move and also can avoid bidding wars that were the norm just a few years ago,” Naik said in January. “Virginia’s market is certainly not yet a buyer’s market, but it is moving towards becoming a more balanced market due to easing supply constraints.”