Buyer Activity Is on The Rise As The Number of Pending Contracts Increased From Last Year, 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 March 27th and April 3rd, 2024, and reflects housing market conditions in Virginia in March 2024. A total of 681 Virginia REALTORS^® members responded to the survey, including 498 who had participated in a home sales transaction within the past month.

Current Market Conditions

Buyers

According to Virginia REALTORS^®, buyer activity continues to rise in 2024. The Buyer Activity Index for March was 56, an increase from 49 in February. Around 36% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in March, and 25% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

Roughly 33% of buyers in March were first-time home buyers, a 2% decrease from February, according to REALTORS^®. About 24% of respondents had an all-cash purchase in March, up 1% from the previous month. In March, 15% of home sales were non-primary residence sales (e.g., rental property, second home, vacation home), down 6% from February.

Recent transactions received an average of 2.8 offers in March, slightly decreasing from 2.9 in February. About 44% of respondents in March stated that bids came in above the listing price, which is up from 42% last month.

Sellers

Seller activity in March increased slightly compared to February, according to Virginia REALTORS^®. The Seller Activity Index in March was 21, marking a 3% increase from last month. About 5% of REALTORS^® reported that seller activity was “high to very high” in their local market, and 62% of respondents said seller activity was “low to very low.”

Obstacles

Though sales activity seemed to rise according to most REALTORS^®, many of their clients faced similar challenges in the March market that hindered their ability or desire to buy or sell a home. In the survey, we asked Virginia REALTORS^® about the main obstacles their clients are facing.

Buyers

After the Federal Reserve announcement to keep rates unchanged, mortgage rates have slightly declined, which is good for consumers, but the lack of inventory is still a looming issue in the market. Around 45% of Virginia REALTORS^® noted that the lack of housing inventory in the state was discouraging their buyers from purchasing a home in March, up 6% compared to the previous month. About 11% of Virginia REALTORS^® stated that rising interest rates were their buyer clients’ most significant obstacle in March, down from 18% compared to February.

Sellers

Nearly 16% of Virginia REALTORS^® stated that their seller clients were unwilling to lose their low-interest rate for a higher rate in the March market, up 1% compared to February. Around 15% of Virginia REALTORS^® confirmed that the lack of inventory in the commonwealth negatively impacted their sellers’ willingness to move. About 9% of REALTORS^® said that rising home prices were stopping sellers from selling their homes because they were worried that they would not get the same type/size of a home elsewhere in their price range, down 3% from the previous month. Most potential sellers in Virginia faced a combination of these obstacles in March, according to REALTORS^®.

Pending Sales Activity

Year-over-year pending sales activity rose for the first time in three years across Virginia. At 7,158, there were 348 more pending sales than last February throughout the state. Even though most pending sales tend to close successfully, there has been a common trend for why some pending contracts have failed to close. In March, 420 REALTORS^®` in Virginia stated one or more of their seller clients had a purchase agreement, and 116 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 March. About 35% of respondents confirmed that the inspection had major issues, which caused the purchase agreement to fail. Around 26% stated that the buyer was not approved for their mortgage loan. Nearly 13% said that the buyer’s old home was unable to sell in time for them to finalize the purchase agreement. About 6% said the buyer lost their job or faced financial issues jeopardizing the mortgage approval.

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 last 31 days of March. According to Virginia REALTORS^®, many stated that their seller clients were on the market because they were moving out of state. This has been the leading reason since we started recording the data in August 2023. Around 24% of clients wanted to sell their homes because they were moving somewhere outside of the commonwealth. About 16% of people were looking to relocate somewhere else in Virginia in March. About 20% were looking to downsize within the same area they live in, and 12% were looking for a bigger house within the same locality. There were about 7% of sellers who were looking to sell their investment property in March.

Market Outlook

Confidence in buyer activity continues to rise 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 65 in March, which is up from 63 in February. About 43% of respondents indicated that they think buyer activity would be strong in the next three months in their local markets, and 14% stated that they believed buyer activity would drop in the next three months.

The Seller Activity Index: 3-Month Outlook decreased from February to March. The Seller Activity Index in March was 37, down from 38 in February. Just 12% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, and 38% said it would be low.

Approximately 58% of Virginia REALTORS^® responding to the survey stated that prices will increase within the next three months. About 12% of REALTORS^® believe that home prices will decrease within the next three months. Around 25% of respondents indicated that prices would remain unchanged for the next three months.

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 +/- 3.75%.

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.