(The Center Square) – Virginia home sales are on pace to record the sharpest annual decline in more than a decade and that decline is expected to carry into next year, but at a slower rate, according to a housing market forecast published by the Virginia Association of Realtors.
The report projects the commonwealth’s housing market will see a 15.7% decline by the end of 2022 and expects another 2.5% decline in 2023. The report suggested that several factors have contributed to this decline – rising mortgage rates, climbing prices and tight inventory conditions.
“All of [these] combined are leaving many buyers on the sidelines,” the report notes. “Home price growth has been strong during this moderating period due to low supply. However, upward pressure on prices is starting to ease and this trend is projected to continue in 2023. Demand for new homes has softened and housing starts have dipped, a trend that will continue next year.”
The medium price for a home will likely increase by 7% by the end of 2022, but is only expected to increase by 2.9% in 2023. The 30-year mortgage rate is projected to increase by 5.95% over 2022 and by 5.2% in 2023. The project number of housing starts will likely be down by 3.1% in 2022 and by 3.6% in 2023, according to the report.
Virginia’s economy is still recovering from the COVID-19 pandemic. The report projects that the year-over-year job growth will be 3% in 2022, which is about 117,000 jobs. It projects the job growth in 2023 to be about 0.3%, which is about 13,000 jobs. The report’s projected unemployment rate for 2022 is 2.8%, but it expects the unemployment rate to increase in 2023 to about 3.5%.
