More Inventory, Modest Price Increases In Northern Virginia's 2025 Real Estate Outlook

VIRGINIA — More inventory and moderate price increases are in store for the Northern Virginia real estate market in 2025, according to a new forecast from the Northern Virginia Association of Realtors and George Mason University’s Center for Regional Analysis.

The association said there are some undetermined factors that may affect the local real estate market, such as the incoming Trump administration's policies.

The 2025 housing forecast released Tuesday covers the City of Alexandria, Arlington County, Fairfax County, Loudoun County, Prince William County and Stafford County. The association says Northern Virginia's outlook mirrors the national outlook, predicting the worst of the housing inventory shortage will be over.

The National Association of Realtors is projecting a 9 percent increase in home sales in 2025 and mortgage rates stabilizing at 6 percent nationwide.

The analysts for Northern Virginia's market indicates there have been signs of more inventory but lingering housing price increases.

"In the Northern Virginia region, working families are finding it increasingly difficult to find housing they can afford," said Terry Clower, director of George Mason University’s Center for Regional Analysis. "This November, a total of 1,168 homes sold in the region, a 10.8 percent increase from last year. That’s good news. But the region’s median home price also rose 6.6 percent to $699,900, compared to what housing cost in November 2023."

The Northern Virginia real estate forecast expects more moderate price increases around 3 percent, although higher increases are possible in tight markets like single-family homes inside the Beltway.

The Northern Virginia Association of Realtors and George Mason University’s Center for Regional Analysis expect listed homes will increase in most of the region's markets, as buyers looking to upgrade will re-enter the market. Stabilized mortgage rates will help boost sales. However, listed homes may remain below pre-pandemic levels.

"We’ve seen Northern Virginia’s housing market improve during the last few months, and we expect that trend to continue into 2025," said Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors. "In fact, monthly sales growth in our regional market have outpaced the national housing market several times this year. The unknown is how the new administration’s proposed policies might impact the local economy, but, overall, we expect an improved housing market next year."

McLaughlin is referring to the potential impact on the housing market when President-Elect Donald Trump takes office on Jan. 20, 2025. According to WTOP, the president-elect has voiced support for cuts and changes to the federal government, which could affect Northern Virginia's federal employee and contractors.

County-By-County Forecast

The region's housing forecast included trends for individual localities.

In Virginia's most populous locality, Fairfax County, the forecast expects single-family home prices to increase 1.5 percent. Sales of single-family homes could increase 5.7 percent compared to 2024, which would be an improvement from tightening inventory. Strong townhouse demand is expected to continue into 2025, with prices increasing an average 3.9 percent and home sales increasing 2.9 percent. Condo demand could lessen as inventory increases 3.6 percent, and price increases will slow to 3.5 percent.

Arlington County, the closest suburb to D.C., will see continued demand due to low inventory of non-condo homes. Despite single-family inventory increasing by an anticipated 1.8 percent, sales could fall by 6.5 percent due to a competitive market. Prices for single-family homes could increase by 5.3 percent in Arlington in 2025.

The low inventory of single-family homes will create strong demand for Arlington's townhouses, which will drive up prices by 8.7 percent. That comes despite inventory increasing 4.3 percent. However, demand for condos will ease slightly, with a 3.6 percent increase in inventory and 1.6 percent increases. The forecast expects condo sales to remain flat.

The City of Alexandria is another place where demand for single-family homes remains competitive. According to the forecast, median prices of single-family homes in Alexandria will increase 9.9 percent. The association says return-to-office policies are the driving force behind demand in Alexandria, which offers proximity to D.C. Inventory of single-family homes will remain low, effectively declining 4.7 percent from 2024.

Alexandria's townhouse market could see inventory increases of 5.2 percent due to price increases for sellers and buyers adjusting to higher mortgage rates. That could result in townhouses remaining on the market for a few more days on average. Townhouse prices are forecast to increase by 3.9 percent in Alexandria. On the other hand, condo prices will increase by 1.5 percent, as sales will flatten and inventory slightly rises.

Three of the outer suburb counties have seen population growth and will continue to see demand.

In Loudoun County, single-family home prices could increase 5.5 percent on average. Strong demand will drive sales up 4 percent and cause month-to-month inventory to fall 1 percent on average. Demand is also strong for townhouses, which will see prices increase 3.8 percent to an average $710,936. Townhouse inventory will decline by 3 percent as sales increase by just 1 percent. Demand to live in Loudoun County will keep condo inventories flat as inventory increases 2 percent.

In Prince William County, single-family home prices will increase 3.5 percent but may appear more affordable than in many of Northern Virginia counterparts. Inventory will remain tight with sales declining by 1 percent. townhouse prices could hit a record 4 percent increase as families look for a more affordable alternative to single-family homes. Townhouse inventory will increase by 5 percent after years of inventory declining.

Prince William County's condo market remains small, but prices will increase by 6.2 percent as buyers seek more affordable alternatives to homeownership. According to the forecast, sales of condos could increase by 6 percent.

To the south, Stafford County could see single-family home prices increase 4.5 percent, which is a lower increase than recent years. Single-family home sales will remain strong with a 2.2 percent increase, supported by 2.5 percent month-to-month inventory increases. Townhouse prices could remain strong, up 3.5 percent due to increased market activity and 3.7 percent rise in inventory. Condo prices will rise by 3.9 percent, although Stafford County's condo market is still in an emerging state.

To put together the 2025 forecast, the association used insights from George Mason University’s Center for Regional Analysis economists and experts from different sectors of the real estate industry.

The latest home prices data from Northern Virginia Association of Realtors' November report was:

Northern Virginia Association of Realtors region

$840,691 average sold price, up 7.8 percent from November 2023

$699,900 median sold price, up 6.6 percent

1,168 home sales, up 10.8 percent

Fairfax County

$844,894 average sold price, up 9.1 percent

$705,000 median sold price, up 6.8 percent

857 home sales, up 16.8 percent

Fairfax City

$697,250 average sold price, up 8.2 percent

$675,000 median sold price, up 10.5 percent

13 home sales, down 13.3 percent

Falls Church

$1,122,375 average sold price, up 39.3 percent

$1,102,500 median sold price, up 41.4 percent

8 home sales, down 33.3 percent

Arlington County

$862,524 average sold price, down 3.8 percent

$695,000 median sold price, down 2.5 percent

154 home sales, down 8.3 percent

Alexandria

$786,221 average sold price, up 17.3 percent

$625,000 median sold price, up 5 percent

136 home sales, up 8.8 percent

Editor's note: Data not provided for Loudoun County, Prince William County and Stafford County in the November 2024 market statistics report.