Low Housing Inventory Continues to Dampen Hopes for Potential Home Buyers According to Virginia REALTORS^®

By Abel Opoku-Adjei
Research Associate, Virginia REALTORS^® 

Each month, the Virginia REALTORS^® Confidence Survey gathers insights from REALTORS^® on local housing markets based on their experiences with real estate transactions in the prior month. This information provides a real-time look at housing market conditions. This month’s Confidence Survey was conducted between May 23rd and June 1st, 2024, and reflects housing market conditions in Virginia in May 2024. A total of 502 Virginia REALTORS^® members responded to the survey, including 328 who had participated in a home sales transaction in the past month. 

Current Market Conditions

Buyers

According to Virginia REALTORS^®, buyer activity increased in May compared to last month. The Buyer Activity Index rose to 51 this month, up from 45 in April. About 29% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in May, and 26% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.  

Roughly 29% of buyers in May were first-time home buyers, which is unchanged from last month. According to the survey, about 23% of the sales transactions were all-cash purchases. Around 16% of home sales were non-primary residence sales (e.g., rental property, second home, vacation home), down 2% from a month ago. 

Recent transactions received an average of 2.9 offers in May, a slight decrease from 3 in April. About 54% of respondents in May stated that bids came in above the listing price, which is 1% higher than a month ago. 

Sellers 

Seller activity in May increased slightly compared to April, according to Virginia REALTORS^®. The Seller Activity Index in May was 37, an increase from 33 in April. Virtually 8% of REALTORS^® reported that seller activity was “high to very high” in their local market, and 56% of respondents said seller activity was “low to very low.” 

Obstacles  

Inventory levels across the state haven’t been enough to meet the current demand. Many potential buyers are not optimistic about purchasing a home in the current housing market conditions and are doubtful about buying or selling their homes. In the survey, we asked Virginia REALTORS^® about the main obstacles their clients are facing. 

Buyers 

Given the current economic trends going on, mortgage rates are likely to remain high throughout most of the year. About 18% of Virginia REALTORS^® stated that rising interest rates were their buyer clients’ most significant obstacle in May, and nearly 40% of Virginia REALTORS^® noted that the lack of housing inventory in the state was discouraging their buyers from purchasing a home. 

Sellers 

According to the survey, about 20% of Virginia REALTORS^® stated that their seller clients were unwilling to lose their low interest rate for a higher rate in the May market, up 2% compared to the previous month. Approximately 13% of Virginia REALTORS^® confirmed that the lack of inventory in the state negatively impacted their sellers’ willingness to move. Roughly 13% of REALTORS^® said that rising home prices were stopping sellers from selling their homes in May because they were worried that they would not get the same type/size of a home elsewhere in their price range. 

Pending Sales Activity 

Pending sales activity in 2024 rose for the third consecutive month compared to the prior year across Virginia. There were 9,819 pending sales throughout the commonwealth in April, which is 710 more than last year. Most pending sales tend to close successfully, but there has been a common trend as to why pending sales have failed to close. In May, 300 REALTORS^® in Virginia stated that one or more of their seller clients had a purchase agreement, and 80 said that the purchase agreement didn’t close as intended.  

We asked REALTORS^® what the most common reason was for the pending contract to fall through in May. Roughly 36% of respondents confirmed that the inspection had major issues, which caused the purchase agreement to fail. About 15% stated that the buyer was not approved for their mortgage. Around 8% said that the buyer’s old home was unable to sell in time for them to finalize the purchase agreement. Approximately 5% of REALTORS^® said that the buyer lost their job or faced financial issues jeopardizing the mortgage approval, and 5% said there were issues within the title. 

Reasons For Selling  

Results From Virginia REALTORS^® Confidence Survey 

We asked Virginia REALTORS^® what was the most common reason their seller clients wanted to sell their homes in the month of May. According to the survey, 29% of REALTORS^® in Virginia stated that their seller clients were moving out of the state in May. Virtually 13% of people in May were looking to relocate somewhere else in the state. Approximately 21% were looking to downsize within the same area they live in, and 10% were looking for a bigger house within the same area. There were about 8% of sellers who were looking to sell their investment property in May.  

Market Outlook 

Confidence in buyer activity in May increased slightly compared to April, according to REALTORS^®. This index gauges how REALTORS^® think the market will perform in the following three months. The three-month buyer activity index was 51 in May, which is up 5 from April. About 22% of respondents indicated that they think buyer activity would be strong in the next three months in their local markets, and 20% stated that they believed buyer activity would drop in the next three months.  

The Seller Activity Index: 3-Month Outlook increased from April to May. The Seller Activity Index in May was 37, up three from the prior month. Roughly 11% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, and 37% said it would be low. 

About 54% of Virginia REALTORS^® responding to the survey stated that prices will increase within the next three months. Roughly 18% of REALTORS^® believe that home prices will decrease within the next three months, and 22% of respondents indicated that prices would remain the same.

Virginia REALTORS^® Confidence Survey: 2024 Highlights

 ^A An index greater than 50 indicates more respondents reported the level of activity as “high to very high” than reported the level of activity as “low to very low.”

^B An index greater than 50 indicates more respondents expect future activity to be “strong” than expected future activity to be “weak.”

A note about surveys: This is not a randomized sample survey of Virginia REALTORS^® members. However, the number of responses and the geographic coverage of respondents make it possible to draw conclusions about the opinions and expectations of Virginia REALTORS^®. The statistics from this survey have a margin of error of +/- 4.37%.  

Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate. 

For more information about Virginia’s housing market, check out our most recent home sales report, local housing market data, or Facebook Live.