Northern Virginia Housing Market Forecast: What to Expect for the Rest of 2025

The Northern Virginia Association of Realtors® (NVAR), in partnership with the Center for Regional Analysis at George Mason University (GMU-CRA), recently released its mid-year update to the 2025 housing market forecast. This consensus report, developed with insights from a panel of real estate experts, provides an in-depth look at the economic trends shaping our region and what they mean for buyers and sellers in the months ahead.

 

The new federal administration’s policies are beginning to show an impact on employment, with federal jobs declining by roughly 20,000 since December 2024.

Despite these declines, Northern Virginia’s economy is showing resilience. Non-farm payrolls are still growing, driven largely by a surge in construction jobs. Emerging technology sectors are also expected to play a role in future economic growth, which helps keep our local housing market steady even during uncertain times.

 

Mortgage interest rates remain one of the biggest hurdles for first-time buyers. While today’s rates (hovering in the mid-6% range) are far from the record lows of the COVID years, buyers are beginning to adjust to what experts call “long-run average” rates.

 

Good news? Market analysts expect the Federal Reserve to cut benchmark rates by 50 basis points by year-end, which could bring a slight dip in mortgage rates, but they’re likely to remain in the mid-6% range for 30-year fixed loans.

 

After several years of skyrocketing prices and low inventory, the housing market is beginning to normalize. According to the NVAR forecast:

•   Home prices are expected to rise modestly, by about 2–2.5%, which aligns with inflation.

•   Unit sales should remain stable or increase slightly, especially for detached single-family homes in sought-after neighborhoods.

•   Inventory levels are climbing in some cases, up to 70% year-over-year. While this sounds like a big jump, it largely reflects a return to pre-pandemic market conditions rather than a surplus of homes.

 

For buyers, this may be one of the best windows to purchase a home since before the pandemic, thanks to rising inventory and slightly less competition. For sellers, steady prices and strong demand, especially in Northern Virginia’s desirable communities, mean that well-prepped and well-priced homes will continue to move.

Fairfax County

•   Prices: Expected to rise 2.2% to 2.5% year-over-year across all home types.

•   Sales Volume: Slight increase of 0% to 1.6% year-over-year, with condos and townhomes showing the slowest growth.

•   Inventory: Significant rise of 52% to 79.5%, with the largest increases in townhomes (79.5%) and condos (73.9%).

•   Overall: Prices are normalizing to pre-pandemic growth rates while inventory rebounds.

 

•   Prices: Modest growth - 0.1% (townhomes) to 3.6% (single-family homes).

•   Sales: Expected declines across all home types -1.8% (townhomes), -4.9% (single-family), and -6.8% (condos).

•   Inventory: Climbing to pre-pandemic levels, 46.3% (townhomes) up to 78.3% (condos).

•   Overall: Prices slightly positive, but fewer sales as inventory grows.

 

•   Prices: Forecast to rise 2.5% to 2.7% year-over-year.

•   Sales: +13.5% (single-family), +3.9% (townhomes), but -0.4% (condos).

•   Inventory: Expected to build, 26.5% (condos) to 77.6% (single-family homes).

•   Overall: Moderate price growth and strong sales for single-family homes as inventory returns to healthy levels.

 

Source: Northern Virginia Association of Realtors® (NVAR) and the Center for Regional Analysis at George Mason University (GMU-CRA), 2025 Mid-Year Housing Forecast. To see their full report and post click HERE