Virginia Home Sales: Fourth Quarter and Year End 2017
The Virginia REALTORS® association publishes monthly and quarterly home sales reports to provide it’s members, the media, and real estate-related industries with current data. The report data comes from a variety of sources and is analyzed by the Virginia REALTORS®.
The data presented is based on specific economic regions comprised of counties and independent cities in Virginia, as detailed in the map below.
Fourth Quarter Summary
Virginia’s fourth quarter residential real estate market capped off a year of growth despite persistent inventory constraints. Both the number of sales and the median price grew notably from 2016. Along with steep declines in the average number of days, properties stayed on the market, performance metrics at year end indicate sustained intensity in demand and buyer willingness to tolerate premiums in order to secure transactions.
Year-over-year, quarterly transactions rose by 4.2 percent (from 26,744 to 27,880). The increase is attributed to particularly strong sales in October and November 2017. Fourth quarter volume rose by 7.1 percent year-over-year, from $8.705 billion in 2016 to $9.322 billion in 2017. Annual volume totaled $41.476 billion, 8.5 percent higher than the sum for 2016 ($38.215 billion).
Annualized sales, the sum of all sales for the preceding twelve months, continued to increase, illustrating long-term sustained growth in Virginia’s housing market. Fourth quarter annualized sales rose 0.9 percent to 122,051 sales (from the third quarter benchmark of 120,915). The sum of all sales in 2017 was 4.7 percent greater than the sum in 2016 (116,621).
Statewide, the median price for the fourth quarter rose by 2.2 percent from 2016 to 2017, from $265,000 to $270,699. Year-over-year, median prices rose in every region except the Eastern region.
Year-over-year, the number of transactions (pace) rose in every region with the exception of Southwest Virginia, where the relatively low number of sales affects reporting metrics. Most notably, sales in the densest regions increased, with particular strength in Central Virginia, where the number of transactions rose by more than 10 percent from the same period last year. Fourth quarter sales increased in all price bands except the lowest ($0 to $100K). The highest jump was in the premium category above $800K, with all bands above $400K rising notably.
Average fixed mortgage interest rates for 30-year and 15-year loans rose both year-over-year and from the third quarter (to 3.92 percent and 3.29 percent, respectively). The cost of financing remains historically low and is a key driver of market entry, and, as the Federal Reserve Bank projects more rate hikes in 2018, may intensify buyer urgency even more.
Sales in the first two months of the fourth quarter exceeded their prior year benchmarks, while December sales fell 1.4 percent from 2016 (from 9,127 to 8,992). The month-to-month decline from November to December 2017 was atypical of historical trends, as the final month of the year has usually seen an uptick in sales activity. The fourth quarter overall did track historical trends in tapering significantly from the third quarter pace by 17 percent (for comparison, sales in the fourth quarter of 2016 fell by 20 percent from the third quarter).
Year-over-year, sales in the fourth quarter rose by 4.2 percent, from a total of 26,744 in 2016 Q4 to 27,880 in 2017 Q4. Relative to the fourth quarter of 2015, sales for the fourth quarter of 2017 rose 13 percent (from 24,670 transactions).
Note: the horizontal bar in the graph indicates the variance in fourth quarter sales from 2014 through 2017, beginning with 23,327 sales in 2014 and rising eventually to 27,880 sales in 2017, with graduated increases for each year in between. Fourth quarter sales were 19.5 percent higher than their 2014 benchmark.
Each data point on the graph above represents twelve months of home sales data ending in the quarter shown. For example, the 2017 Q4 figure (122,051 sales) includes the calendar year of home sales (from January through December 2017), while the Q3 figure (120,915 sales) includes home sales from October 2016 through September 2017. This rolling sum of home sales reduces seasonal effect, providing a clearer indicator of long-term trends in Virginia’s housing market.
Annualized sales ending in the fourth quarter of 2017 rose by 0.9 percent from the previous quarter. Year-over-year, annualized sales for the fourth quarter improved by 4.7 percent. The long-term trend of continued growth indicates sustained improvement in the market.
The chart above compares 2017 fourth quarter sales to 2016 fourth quarter sales, by region. With the exception of the Southwest region, sales grew year-over-year in all areas of the state. Performance metrics are relative to the absolute number of sales, so less dense regions like the Southwest and Southside regions have variances that seem more pronounced. The most notable year-over-year difference was in the Central region, where the number of sales jumped more than 10 percent.
In comparison to the fourth quarter of 2016, aggregate median price rose by 2.2 percent for the last quarter of 2017 (from $265,000 to $270,699). Relative to the fourth quarter of 2015, median price rose by 5.4 percent (from $256,738). Continued price increases have been driven by high demand and consumer confidence, as well as persistent supply constraints. Typical of industry seasonality, median price decreased from the third quarter mark by 3.3 percent (from $280,000). Last year’s decrease between the third and fourth quarters was 2.8 percent.
Median sales price increased year-over-year in every region except the Eastern region, where the relatively low number of sales can have an outsized impact on the performance variance. There were strong gains in the most densely populated regions, particularly Central and Northern Virginia. Note: because ‘Other’ sales represent so few transactions, there is greater variance in price movement for each reporting period.
This graph represents the dollar value of residential real estate sold (in billions) during each quarter for the last three years. The volume of real estate sold in the fourth quarter of 2017 rose by 7.1 percent year-0ver-year, from $8.705 billion to $9.322 billion. Volume was amplified year-over-year by increases in both price and the number of transactions. Annual volume for 2017 totaled $41.476 billion, an increase of 8.5 percent from the 2016 volume ($38.215 billion). Apparent in the graph below, annual volume has risen significantly each year in recent records, averaging a 10 percent increase every year since 2014.
Year-0ver-year home sales increased in every price category except the lowest range ($0 to $100K), where the limited availability of inventory typically restricts the number of sales possible. Growth was strongest in the highest ranges, with pace increasing especially in bands $400K and higher and with particularly strong growth in the premium band above $800K.
Because sales in ranges below $750,000 represent the vast majority of transactions in Virginia, they are a clear indicator of market performance. The greatest number of transactions by price band in 2017 Q4 happened in the $200k to $300k range. Inadequate supply resulted in the year-over-year drop in the number of sales in the starter range from $0k to $100k.
The average number of days on the market in the fourth quarter of 2017 decreased from the same quarter last year by more than 11 percent, from 70 days to 62. The urgency of buyers has contributed to steep declines in the average number of days on the market. With limited inventory and eager buyers, the speed of transactions has quickened significantly. Relative to the fourth quarter of 2015, average days on the market for the end of 2017 dropped by 21.5 percent (from 79 days).
The changes in the pace of Virginia home sales in the fourth quarter have tracked the changes in the pace of sales in the United States as a whole. At both the state and national levels, December sales were slightly contracted from their prior year marks. Pervasive inventory constraints have stifled the number of transactions.
Virginia median price changes performed slightly better than the changes in the median of existing- home sales prices nationally for the fourth quarter of 2017.
*Virginia sales reported in the graphs above include all single family, townhouse, and condo sales. U.S. sales are existing single family sales as reported by the National Association of REALTORS®. Existing sales do not include newly constructed homes sold for the first time.
The Virginia unemployment rate fell in the fourth quarter to seasonally-adjusted 3.7 percent. The rate for December was reported at 3.7 percent. Virginia unemployment continues to track below the national average (4.1 percent). Low unemployment is generally correlated with bolstered consumer confidence.
Average 30-year and 15-year fixed mortgage interest rates for the fourth quarter of 2017 rose from the previous quarter and were higher than in the fourth quarter of 2016. Thought rates ticked up and the Federal Reserve Bank has projected three increases over the course 2018, buyers are still able to take advantage of historically low interest rates and may feel even greater urgency to enter the market.
The Virginia REALTORS® association is the largest professional trade association in Virginia, representing approximately 33,000 REALTORS® engaged in the residential and commercial real estate business. The Virginia REALTORS® association serves as the advocate for homeownership and private property rights and represents the interests of real estate professionals and property owners in the Commonwealth of Virginia.
NOTE: The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict code of ethics.
Psst. I’m a real estate agent.
This post was authored by local resident and REALTOR, John Womeldorf. John is known around town as Mr. Williamsburg, for both his extensive knowledge of the Williamsburg/ Hampton Roads/ Richmond VA area and his expertise helping buyers and sellers in the local real estate market.
If you are a homeowner searching for someone innovative to sell your home I would love to share my thoughts on marketing. You can read some of the stories I have written about the homes I have sold here.
Additionally, I have helped hundreds of folks find their dream home/ community and would love to help you find yours in Williamsburg, Yorktown, New Kent, VA Beach, Chesapeake, Suffolk, Isle of Wight Poquoson as well as Richmond.
You can reach me by phone at 757-254-8136 or email [email protected]
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