High interest rates continue to weigh on the real estate market in Northern Virginia

Continued high mortgage rates weighed on Northern Virginia home sales in September, which fell 18.2 percent from a year earlier, according to the Northern Virginia Association of Realtors.

This decline was worse than August's year-over-year decline of just 12.4% and turned into an improving market trend seen since the spring.

The mortgage rates vary between 7% and 7.5%, according to the group of brokers. Sales were down 23.1% compared to August and the total of 1,180 was significantly lower than the five-year average of 1,685 units for September.

"This is a challenging market for borrowers and buyers, especially first-time homebuyers," said NVAR board member Jamie DeSimone of Keller Williams Capital Properties. "The increase in interest rates is a major deterrent for buyers and sellers. Current homeowners have no incentive to pass up a lower interest rate unless they are forced to move. This is why there are few options for buying a house."

Inventories in September averaged 1.22 months, down 1% from September 2022 and down from the five-year average of 1.3 months. On the bright side, September's inventory figures were slightly higher than August, when inventories stood at 1.08 months' supply. On average, homes stayed on the market for 17 days in September, down 32% from the previous September, when the average was 25 days on the market.

The tight supply continued to raise prices. The median sales price for a home in September was $650,000, up 5% from September 2022. The five-year average for the September median sales price is $594,028.

"We experienced the "ouch factor" as high mortgage rates marked the market. With the resulting limited inventory, sellers who choose to list their homes receive multiple offers and have leverage over buyers. The market remains competitive, as there are more people wanting to buy than there are homes to sell," said NVAR CEO Ryan McLaughlin.

The NVAR report covers Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church and the towns of Vienna, Herndon and Clifton.

Additional highlights from the September report:

Total sales volume: 868.9 million dollars, a decrease of 14.4% compared to September 2022.

Average sales price: $738,772, up 6% from September 2022.

Number of active listings: 1,661, down 29.8% from September 2022.

Pending new sales: 1,220, down 12% from September 2022.

Specific information for each jurisdiction in September is below: