Sellers are Unenthusiastic About Selling Their Homes Due to Tight Inventory and Mortgage Rate Conditions

Results from the Virginia REALTORS^® Confidence Survey

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 June 23rd and June 30th, 2023, and reflects housing market conditions in Virginia in June 2023. A total of 752 Virginia REALTORS^® members responded to the survey, including 586 who had participated in a home sales transaction in the last 30 days.

Current Market Conditions

Buyers

According to Virginia REALTORS^®, buyer activity decreased in June. The Buyer Activity Index for June was 59, a fall from 63 in May. About 40% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in June, and about 22% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

According to survey respondents, around 32% of buyers in June were first-time home buyers, down 1% from May. Roughly 21% of respondents accepted an all-cash purchase in June, which is a 3% increase from a month ago. Approximately 18% of home sales in June were non-primary residence sales (e.g., rental property, second home, vacation home), up from 19% in May.

The average number of offers increased slightly from May to June, according to REALTORS^® responding to the Confidence Survey. Recent transactions received an average of 2.7 offers in June, an increase from 2.6 in May. Virtually 55% of respondents in June stated that bids came in above the listing price, a 5% decline from May.

Sellers

Seller activity fell short in June compared to the previous month, according to Virginia REALTORS^®. The Seller Activity Index in June was 14, down from 16 in May. About 3% of REALTORS^® reported that seller activity was “high to very high” in their local market in June. Nearly 76% of respondents reported that seller activity was “low to very low” in June.

Obstacles

As we start to fade out of the spring market, many potential buyers and sellers face similar challenges that hinder them from participating in the housing market. In the survey, we asked Virginia REALTORS^® about the main obstacles their clients are facing.

Buyers

About 51% of Virginia REALTORS^® stated that the lack of inventory in the state’s housing stock is impeding buyers from purchasing a home in the June spring season. In the survey, nearly 16% of Virginia REALTORS^® emphasized that rising interest rates are their buyer clients’ most significant obstacle. In June, about 1% of Virginia REALTORS^® stated that saving for a down payment and increasing home prices is the biggest challenge for their buyer clients.

Sellers

Around 15% of Virginia REALTORS^® stated that their seller clients are unwilling to lose their low interest rate for a higher rate when they sell their home. Roughly 19% of Virginia REALTORS^® noted that the need for more inventory in the market is hindering their seller clients from being able to sell their homes and find a different home to move to in June. About 12% of REALTORS^® in June said that rising home prices are stopping sellers from selling their homes because they are worried they won’t get the same type/size of a home elsewhere in their price range. Many sellers face a combination of all these factors, making them insecure about selling their home. Virginia’s lack of inventory continues to be the biggest concern among sellers.

Market Outlook

Confidence in buyer activity remained unchanged in June compared to last month from REALTORS^® in Virginia. This index gauges how REALTORS^® think the market will perform in the following three months. The buyer index was 57 in June. About 32% of respondents indicated that they thought buyer activity would be strong in the next three months in their local markets, a decrease from 33% in May.

The Seller Activity Index: 3-Month Outlook fell short in June compared to May. The Seller Activity Index in June was 25, a decrease from 28 in May. Around 6% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, decreasing by 2% from a month ago.

The share of survey respondents who expect prices to rise in their local markets in the next three months decreased in June. Roughly 47% of Virginia REALTORS^® responding to the survey stated that they believe prices will increase within the next three months. Around 21% of REALTORS^® believe that home prices will fall within the next three months. About 28% of respondents to the survey indicated that prices would most likely remain the same for the next three months.

Virginia REALTORS^® Confidence Survey: 2023 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 expect 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 +/- 3.6%.

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.