Virginia REALTORS® Predicts Housing Market Rebound in 2025

The Virginia REALTORS® association has released its highly anticipated 2025 Economic & Housing Market Forecast, predicting a positive outlook for the state’s housing market. The forecast suggests a rise in home sales, stabilizing mortgage rates, and modest growth in home prices—all driven by a combination of pent-up demand, an increase in active listings, and improving economic conditions.

According to Ryan Price, Chief Economist at Virginia REALTORS®, the state’s housing market is expected to see a significant 9.8% increase in home sales next year. “We have a lot of pent-up demand in our housing market here in Virginia,” said Price. “The supply gains we’ve seen so far in 2024 are likely to continue into 2025, bringing more active listings out in the market. This will provide that pent-up demand with more options to choose from. Couple this with lower mortgage rates, and we’ll likely see Virginia’s sales activity increase in 2025.”

This prediction marks a shift from the slower sales experienced in recent years, where buyers faced challenges due to high mortgage rates and a lack of available homes. However, mortgage rates are expected to ease by the end of 2025, declining from the current high to around 5.75%, according to the forecast. This downward trend is expected to help alleviate affordability issues for some buyers and encourage more movement in the market. The report highlights the “lock-in effect,” where many homeowners with low mortgage rates have been reluctant to sell in recent years. Decreasing mortgage rates could motivate these homeowners to list their properties, further boosting market activity.

Home Prices Continue to Climb, Though Slowly

While home sales are predicted to rise, the annual median home price in Virginia is also expected to increase, albeit at a more moderate pace. The forecast projects a 3.4% growth in home prices over 2024.

“Prices are still climbing in most local markets in Virginia,” said Sejal Naik, Deputy Chief Economist at Virginia REALTORS®. “We anticipate this will continue in 2025, though at a slower rate. The supply-demand imbalance remains a factor, putting upward pressure on home prices.”

The price increases come despite the addition of more housing stock in 2025. Builders are expected to contribute to the market with a 2.6% increase in new housing starts, with single-family homes and townhouses leading the way. Multifamily housing projects, which have seen a slowdown in recent years, will likely continue to decline.

Virginia’s Job Market and Economy Show Stability

The broader economic outlook for Virginia in 2025 remains relatively stable, with a 1.2% net job growth forecast, translating to approximately 51,000 new jobs across the state. The unemployment rate is expected to rise slightly from 2.8% to 3.2%, though it will remain well below the national average. This slight increase is attributed to weaker economic conditions across the U.S., but Virginia’s job market is expected to remain more resilient.

The state’s strong job market is seen as a key driver for the expected uptick in housing demand, as employment growth generally leads to more household formations and, ultimately, home-buying activity.

Looking Ahead

With all signs pointing to a busy year for real estate in Virginia, the forecast emphasizes that the commonwealth is poised for a rebound in housing activity. Increasing inventory, improving mortgage conditions, and a growing job market create a favorable environment for buyers and sellers alike.

Virginia REALTORS® remains optimistic about the coming year, encouraging prospective buyers and sellers to stay informed and consider their options as the market evolves.

The organization, which represents more than 35,000 real estate professionals across the state, will continue to advocate for homeownership and property owners’ interests.

For more details, visit www.virginiarealtors.org or follow Virginia REALTORS® on Facebook and LinkedIn.