REALTORS® in Virginia Predict Low Buyer Activity Before the Summer Market as Mortgage Rates Climb Over 7%.

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 April 26th and May 2nd, 2024, and reflects housing market conditions in Virginia in April 2024. A total of 614 Virginia REALTORS^® members responded to the survey, including 427 who had participated in a home sales transaction in the past month.

Current Market Conditions

Buyers

Virginia REALTORS^® reported a significant shift in buyer activity in April. The Buyer Activity Index dropped to 45, marking the first decline in 2024. This is a notable decrease from the 56 recorded in March. The survey also revealed that 27% of REALTORS^® rated buyer activity as “high” or “very high” in April, while 36% rated it as “low” or “very low”.

Approximately 29% of buyers in April were first-time home buyers, a 4% decrease compared to March, according to REALTORS^®. All cash-in purchases rose to 25% in April, up 1 from March. About 18% of home sales were non-primary residence sales (e.g., rental property, second home, vacation home), up 3% from a month ago.

Recent transactions received an average of 3 offers in April, a moderate increase from 2.8 in March. About 53% of respondents in April stated that bids came in above the listing price, which is 9% higher than the previous month.

Sellers

Seller activity in April increased slightly compared to March, according to Virginia REALTORS®. The Seller Activity Index in April was 23, a 2% increase from March. Roughly 6% of REALTORS® reported that seller activity was “high to very high” in their local market, and 61% of respondents said seller activity was “low to very low.”

Obstacles

According to our most recent data, year-over-year sales activity in Virginia fell for the first time in 2024. Many potential home buyers are feeling uneasy about the current housing market conditions and are pessimistic about buying or selling their homes. In the survey, we asked Virginia REALTORS^® about the main obstacles their clients are facing.

Buyers

Mortgage applications nationwide fell 2.3% last week compared to a week ago, as rates began to climb over 7%. Hopes of mortgage rates cutting back have faded away after the FED announced that interest rates will remain unchanged for the near future as they try to tackle inflation. About 22% of Virginia REALTORS^® stated that rising interest rates were their buyer clients’ most significant obstacle in April, up 11% compared to March. Nearly 46% of Virginia REALTORS^® noted that the lack of housing inventory in the state was discouraging their buyers from purchasing a home in April, down 9% from the previous month.

Sellers

Virtually 18% of Virginia REALTORS^® stated that their seller clients were unwilling to lose their low-interest rate for a higher rate in the April market, up 2% compared to the prior month. Approximately 13% of Virginia REALTORS^® confirmed that the lack of inventory in the state negatively impacted their sellers’ willingness to move. Around 13% of REALTORS^® said that rising home prices were stopping sellers from selling their homes in April because they were worried that they would not get the same type/size of a home elsewhere in their price range, up 4% from March.

Pending Sales Activity

Pending sales activity in 2024 has risen for two consecutive months compared to 2023 across Virginia. At 8,981, there were 444 more pending sales than last March throughout Virginia. Even though most pending sales tend to close successfully, there has been a common trend for why pending contracts have failed to close. In April, 350 REALTORS^® in Virginia stated that one or more of their seller clients had a purchase agreement, and 104 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 April. About 33% of respondents confirmed that the inspection had major issues, which caused the purchase agreement to fail. Nearly 26% 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. About 11% said that the buyer lost their job or faced financial issues jeopardizing the mortgage approval, and 8% 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 April. About 24% of clients wanted to sell their homes because they were moving somewhere outside of Virginia. Around 14% of people in April were looking to relocate somewhere else in the state. Roughly 18% were looking to downsize within the same area they live in, and 14% were looking for a bigger house within the same area. There were about 8% of sellers looking to sell their investment property in April.

Market Outlook

Confidence in buyer activity fell sharply compared to a month ago in Virginia, 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 46 in April, which is 19% lower than it was in March. About 24% of respondents indicated that they think buyer activity would be strong in the next three months in their local markets, and 33% stated that they believed buyer activity would drop in the next three months.

The Seller Activity Index: 3-Month Outlook decreased from March to April. The Seller Activity Index in April was 33, down four from March. Around 11% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, and 46% 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^®. These statistics from this survey have a margin of error of +/- 3.96%.

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.