Happy Monday morning, friends!

It seems it might start feeling like Spring in the Shenandoah Valley this week.  While this morning started off just below freezing... we'll clear 60 degrees by this afternoon... and we might even see 70 tomorrow and Wednesday!

The big question, though, is will the local real estate market start heating up as the weather warms up?  January and February have been slower than usual in the local housing market -- with fewer home sales than past months of January and February.

But before we take a look through some market data, two quick notes...

#1 - Each month I offer a giveaway to the readers of my market report.  This month, I'm giving away a $50 gift card to Mashita.  My favorite dish is Bibimbap, but if you are the winner, take a friend and try a few items from their Korean-inspired menu that delivers classic cultural flavors and exciting new combinations.  Click here to enter to win the $50 gift card.

Now, on to the latest market data...

A variety of items to note above, given the mix of decreases (red %) and increases (green %) in the far right column.

[1]  We saw 13% fewer home sales this February compared to last February... though keep in mind that this is closings, so was mostly a result of fewer contracts this past January and December.

[2]  When looking at the past three months (Dec 2024 - Feb 2025) we still see a 5% decline in home sales compared to how many homes sold in the same timeframe last year.

[3]  When we stretch the time horizon out a bit further, looking at the past six months (Sep 2024 - Feb 2025) we do see a 10% increase in home sales compared to the same timeframe last year.

[4]  The longest timeframe of all -- the past 12 months compared to the 12 months prior to that -- shows an 8% increase in the number of homes that are selling.

So, overall, we're seeing more homes selling over the past year as compared to the prior year -- but that trend has not held true over the past three months.  You'll see that phenomenon visually a bit later in this report.  Keep on reading... or scrolling.

Now, about those sales prices...

Now, about those prices.  As the headline referenced... sales prices are higher... ever higher.  Over the past 12 months the median sales price was $346,680... which is 4% higher than it was in the 12 months prior to that.  

You may recall that there were recently multiple years of 10% per year increases in the median sales price.  We are not seeing those sorts of changes in the overall market-wide median sales price any longer... though keep reading to see where we are seeing higher and lower increases in subsets of our local market.

And how about "days on market" -- how quickly homes are selling...

Interestingly, homes are selling (going under contract) quite a bit more quickly this year than last.  Over the winter months (Dec - Feb) we saw homes going under contract in a median of seven days... down 36% from the median of 11 days last year.  Median days on market has decreased across the board in the chart above, regardless of the time horizon

Just a very loose theory, but the higher mortgage interest rates were newer a year ago than they are now... and we did see some slowing of buyer decisions in the first year or two of "higher" mortgage interest rates.  More on that later.

Now, breaking it down into a few smaller sectors of our local housing market, first detached (single family) homes...

Two things to note relative to detached home sales...

[1]  While we have seen a market-wide 8% increase in the number of homes selling in Harrisonburg and Rockingham County... we have only seen a 4% increase in detached home sales.  Yes, more detached homes have sold in the past 12 months compared to the prior 12 months... but this segment of the market has not picked back up as much as the overall market.  An important note here... the smaller increase in detached homes is almost certainly a result of fewer sellers selling, not fewer buyers buying.

[2]  Perhaps because there are fewer sellers selling, and possibly just as many buyers who want to buy, we have seen a larger (10%) increase in the median sales price of detached homes over the past 12 months as compared to the 4% increase in the overall market.

And how about the detached home's counterpart... the attached home?

What are attached homes, anyhow?  They are mainly townhouses... but they also include duplexes and condos.  Above you'll note that...

[1]  We have seen a significant (18%) increase in the number of townhomes selling over the past 12 months... compared to only an 8% increase in overall home sales.  So, a greater portion of the increase in local home sales is attached homes... not detached homes.  Again, this is likely because more attached homes are available for purchase -- spoiler alert, because of newly constructed townhomes.

[2]  Perhaps because there are more attached homes available for buyers to buy... we have seen a smaller increase in their median sales price over the past 12 months... with only a 2% increase, compared to the market-wide 4% increase in median sales price.

Since I started to mention new home sales, let's see what's happening there...

These market segment metrics continue to tell a very interesting story...

[1]  We have seen a huge (25%) increase in new home sales over the past 12 months.  This is well above the market-wide 8% increase in home sales.

[2]  The median sales price has actually edged down a smidge (1%) over the past 12 months, though this could be a result of product mix... the price (based on size) of new homes being built and sold.

Given these trends in new home sales, the following likely won't be surprising...

[1]  Existing home sales are up... 3%... but that is well below the 8% increase in home sales.  So... most of the increase in home sales over the past 12 months has been a result of new home sales.

[2]  The median sales price of those existing homes selling has increased 9% over the past 12 months... well above the market-wide increase of 4%. 

 

Now... on to some graphs that continue to explain current market dynamics and add a bit more context...

The red line above shows home sales in January and February of 2025... slow as can be!  We saw fewer home sales this Jan+Feb (red line) than we saw last Jan+Feb (blue line) and also less than the average of the past four years.

  

Some would point out that it has been a snowier start to the year... which might have delayed some sellers in listing their homes for sale.  Well, as I pointed out, it's going to be 60 degrees today and 70 degrees tomorrow... so the weather has never been better (thus far in 2025) for listing your home for sale!  ;-)

Here's a visual of the overall trends in how many houses are selling and the prices at which they are selling...

I have drawn the main points on there for you... but at the top you'll note that prices are still rising but doing so more gradually this year than last... and at the bottom you can see that recent slowing in the number of homes that are selling.

Pausing for a moment on that point... clearly the 1,363 home sales over the past 12 months is more than the 1,262 home sales over the 12 months prior to that... but the pace of annual sales has started to slow over the past three months.  Stay tuned to see what this Spring will bring.

Next... did I mention new homes are a significant part of the market right now?

Interestingly... of all the home sales thus far in 2025... 30% of them were new home sales!  So... while plenty of existing homeowners are not selling their homes... that inventory shortage is being at least somewhat offset by new homes being built.  Can you imagine the state of the market if new homes weren't being built? 

  

Now, the predictive graph... what does recent contract activity tell us about the next few months of home sales...

Well... we might see another months of slow sales activity (in March) because contract activity was pretty slow in February!?!  Yes, this was mostly expected... contract activity usually drops between January and February... but this February was *quite* slow! 

  

Last February we saw 94 homes go under contract... this February... ouch... only 76.  But... before we get too concerned about such low levels of contract activity... let's see how many homes buyers had to choose from this year and last...

Perhaps you're seeing some of the challenge here... fewer buyers (and sellers) contracted to buy (and sell) in February... but it is at least partially because there are far fewer sellers selling. 

At the end of January there were 42 fewer sellers this year than last January.  Thus, it's probably not too surprising that fewer contracts came together in February.

And now, at the end of February (ish) there are 29 fewer sellers this year than last February.  Thus, if we again see fewer home sales in March, don't be too surprised.

Finally, let's check in on mortgage interest rates...

It has been an interesting past year for mortgage interest rates... which are technically now a bit lower than they were a year ago.  Over the course of the past year the 30 year fixed mortgage interest rate has been as high as 7.17% and as low as 6.08%.  If I had to make a guess about the next few months, I suspect we'll be mid 6% range... which we'll call 6.25% to 6.75%.  If rates trend down towards the bottom of that range, that will at least partially spur on further buyer interest... but there may or may not be sellers ready to sell those interested buyers their homes.

So as we wrap things up, what can we conclude about what is going on in our local housing market?

[1]  We have seen 8% more home sales over the past 12 months compared to the prior 12 months.

[2]  But... the number of homes that selling has trended down over the past few months.

[3]  The median sales price has increased 4% over the past 12 months.

[4]  But... the median sales price of detached homes has increased 10% and the median sales price of existing homes has increased 9%.

[5]  Home sales and contract activity were slower this January and February than last year.

[6]  But... this is likely a result of inventory levels being lower this year than last.

So, looking ahead...

If you plan to sell your home this year... let's do it now... there are lots of buyers ready to consider your home!

If you plan to buy this year... let's hope the right seller or sellers are ready to sell when you are ready to buy.  Get pre-approved with a great local lender and be ready to go look at homes quickly when they hit the market.

If you own your home and you don't plan to sell... I get it... enjoy your home, and your neighborhood... and your likely low mortgage interest rate... and your likely increasing home value... and be thankful you were able to buy a home and aren't in the camp of would-be buyers who haven't been able to find something to buy.

If found this market to be interesting or helpful - great!  If you have more questions that I didn't answer, perhaps about your house or your situation, feel free to reach out anytime.  I'm here to help. You can contact me most easily by phone/text at 540-578-0102 or by email here.