2025 was a year of improving inventory conditions, a downward trend in mortgage rates in the latter part of the year, increasing prices, and a modest growth in sales across the housing market in Virginia. As 2026 approaches, we expect a lot of the existing trends to continue their momentum. Let’s break down some of the expected trends in the housing market this year.

1. Affordability constraints are likely to loosen in some local markets in Virginia.

While we expect overall home prices to continue rising, the pace of this growth is likely to slow down, as it has been over the past year. With more inventory entering the market in Virginia, the scales are tipping increasingly in favor of buyers, though in most local areas we’ll continue to see seller’s market conditions. 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. 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.

2. Additional inventory, strong pent-up demand, and gradual improvement with mortgage rates are expected to fuel home sales activity in 2026.

2025 saw inventory conditions improving across the local markets of Virginia. In most months of the year, inventory levels were higher than in 2024. This was due to a combination of increase in new listings (more sellers entering the market) and active inventory (homes staying on the market for longer). We expect this trend to continue in 2026. Furthermore, we expect more newly built single-family homes to enter the housing supply. All this is likely to provide potential buyers with more options and also spur move-up buyer activity.

3. Mortgage rates are likely to continue their gradual decline over the next 12 months.

After starting the year close to 7%, mortgage rates have been relatively stable in recent months, hovering below 6.5% for nearly five months. In fact, in recent weeks, the rate on a 30-year fixed rate mortgage dropped to its lowest level in more than 3 years at 6.06%. In 2026 it is expected that rates will continue to slowly drift down to the low 6% range. Going into 2026, the labor market has been showing signs of weakness and unemployment has been climbing. This will likely lead to one or two Federal Fund rate cuts in 2026, although this will be driven by incoming economic data and could shift. Mortgage rates are driven by long-term bond markets but are indirectly influenced by Federal Reserve decisions, among other factors. So, mortgage rates will continue to move up and down, but the longer-term trajectory, as we are sitting now at the start of 2026, is expected to slowly trend downward. If this occurs it will provide a boost to housing market activity in 2026.

For more information on housing, demographic and economic trends in Virginia, be sure to check out Virginia REALTORS® other Economic Insights blogs and our Data page.