2016 - Third Quarter Virginia Home Sales Report

Published by the Virginia Association of REALTORS®, the advocate for real estate professionals and property owners in Virginia.

QUARTER

2016

THIRD

2016 Third Quarter

The Virginia Association of REALTORS® (VAR) publishes monthly and quarterly home sales reports to provide our 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 Association of REALTORS®. All data may be used with citation to the proprietary owner, the Virginia Association of REALTORS®.

The data presented is based on specific economic regions comprised of counties and independent cities in Virginia, as detailed in the map below. It should be noted that these regions do not necessarily align with the counties and cities that comprise the 28 local REALTOR® associations in Virginia. For example, the economic region defined as Northern Virginia encompasses more counties and cities than those within the bounds of the Northern Virginia Association of REALTORS®. Please take this into consideration when referencing regions.

Central

Southside

Eastern

Southwest

Hampton Roads

Valley

Northern

West Central

Central

Eastern Hampton Roads

Northern

Southside

Southwest

Valley

West Central

Albemarle, Amelia, Buckingham, Caroline, Charles City, Chesterfield, Culpeper, Cumberland, Dinwiddie, Fluvanna, Goochland, Greene, Hanover, Henrico, King & Queen, King William, Louisa, Madison, Nelson, New Kent, Orange, Powhatan, Prince George, Rappahannock, Sussex; Charlottesville, Colonial Heights, Hopewell, Petersburg, Richmond

Accomack, Essex, King George, Lancaster, Middlesex, Northampton, Northumberland, Richmond, Westmoreland Gloucester, Isle of Wight, James City, Mathews, Surry, York; Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, Williamsburg

Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, Stafford, Warren; Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park

Brunswick, Charlotte, Greensville, Halifax, Henry, Lunenburg, Mecklenburg, Nottoway, Patrick, Pittsylvania, Prince Edward, Southampton; Danville, Emporia, Martinsville

Bland, Buchanan, Carroll, Dickenson, Floyd, Grayson, Lee, Russell, Scott, Smyth, Tazewell, Washington, Wise, Wythe; Bristol, Galax, Norton

Alleghany, Augusta, Bath, Frederick, Highland, Page, Rockbridge, Rockingham, Shenandoah; Buena Vista, Covington, Harrisonburg, Lexington, Staunton, Waynesboro, Winchester

Amherst, Appomattox, Bedford, Botetourt, Campbell, Craig, Franklin, Giles, Montgomery, Pulaski, Roanoke; Lynchburg, Radford, Roanoke, Salem

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

1

2016 Third Quarter

Third Quarter Market Summary Third quarter performance indicates sustained strength in the Virginia residential real estate market. Both the total number of sales and the value of transactions rose from the same period last year, to 32,949 units and $10.821 billion, respectively. Year‐to‐date, the value of transactions has risen to $29.155 billion, up 6.9 percent from the first nine months of 2015.

Performance for the third quarter ballooned in August as pent up demand absorbed replenished listings following a July restrained by buyers’ limited inventory options and economic caution. Conditions normalized in September, with performance moderately exceeding September 2015 metrics.

Volume for the quarter ‐ the sum of all transactions for July, August, and September of 2016 ‐ was 5.8 percent higher than the same period last year, and 17.6 percent higher than the third quarter of 2014. Median price increased by 1.9 percent over last year’s third quarter, rising from $265,000 to $270,000.

Year‐over‐year, third quarter home sales increased in all price bands except the lowest, where limited inventory restricts market activity. Sales increased in every region of the state except the Eastern Region, which accounts for less than 2 percent of all transactions.

The 30‐year and 15‐year fixed mortgage interest rates have persisted at historic lows, averaging 3.45 percent and 2.75 percent for the quarter, respectively. Anticipation of a near‐ term rate increase by the Federal Reserve Bank has intensified, but any action would likely be modest and may be deferred past December, pending labor and inflation benchmarks.

Access to low‐cost financing that motivated buyers in the third quarter should continue to encourage market entry.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

2

2016 Third Quarter

Month‐to‐Month Sales Trends Single Family Homes, Townhomes, Condos 2013

2014

2015

2016

Number of Single Family, Townhome, and Condo Sales

15,000 13,222 12,500

11,739

11,450 11,642

10,171

9,857

10,000 8,629 7,500

6,536 5,931

5,000 Shaded area is Q3

2,500

2013 2014 2015 2016

Jan

Feb

Mar

Apr

May

June

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

Sep

Oct

Nov

Dec

5,613

6,022

7,555

8,739

10,582

10,873

10,457

10,234

8,243

7,996

6,990

7,606

5,427

5,706

7,150

8,507

9,702

10,632

10,177

9,487

8,360

8,447

6,661

8,306

5,807

6,085

8,521

9,169

10,369

12,684

11,820

10,204

9,566

8,870

7,020

8,750

5,931

6,536

8,629

10,171

11,739

13,222

11,450

11,642

9,857

July

Aug

Sep

September 2016 sales grew 3 percent year‐over‐year to 9,857 (from 9,566 in September 2015).

Typical of industry seasonality, September sales fell from the prior month (15.3 percent, from 11,642 to 9,857). The seasonal descent this year was more pronounced than last year’s because of the August sales boom that resulted from pent up consumer demand.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

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2016 Third Quarter

Quarterly Residential Sales Single Family Homes, Townhomes, Condos Number of Single Family, Townhome, Condo Sales

40,000 35,132

35,000 30,000

32,949

32,222 31,590 28,934

25,000

28,841

28,024 24,640

23,414

22,592

21,096

20,413

20,000

18,283

15,000 4.3 %

10,000 5,000 ‐ 2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

2016 Q2

2016 Q3

Sales in the third quarter of 2016 grew by 4.3 percent year‐over‐year, from a total of 31,590 in 2015 to 32,949. Relative to the third quarter of 2014, sales have grown 17.6 percent. As illustrated further through annualized sales metrics (page 5), year‐over‐year improvements in quarterly performance indicate that market growth is sustained.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

4

2016 Third Quarter

Annualized Residential Sales Number of Single Family, Townhome, and Condo Sales

Single Family Homes, Townhomes, Condos 120,000 115,000 110,000 105,000 100,000 95,000 90,000

5.7 %

85,000 80,000 75,000 70,000 2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

2016 Q2

2016 Q3

Each data point on the graph above represents twelve months of home sales data ending in the quarter shown. For example, the 2016 Q3 figure (113,817 sales) includes home sales from October 2015 through September 2016. This rolling sum of home sales reduces seasonal effect, providing a clearer indicator of long‐term trends in Virginia’s housing market.

Annualized sales have grown for eight consecutive quarters, indicating sustained growth regardless of seasonal market fluctuations. Continued improvement in this measure illustrates strengthening over the long‐term in the residential real estate market. Annualized sales ending in the third quarter of 2016 grew 1.2 percent from the previous quarter. Year‐over‐year, the measure grew 5.7 percent (from 107,639 to 113,817).

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

5

2016 Third Quarter

Regional Changes in Sales 2015 Q3 vs. 2016 Q3 Units +3.5 %

+4.2 %

‐3.5 % +6.5 %

+1.7 % +8.6 %

+5.1 %

+2.0 %

Region Central

2015 Q3 6,672

2016 Q3 7,105

6.5%

Eastern

601

580

‐3.5%

Hampton Roads

6,979

7,337

5.1%

Northern

11,953

12,373

3.5%

Southside

642

655

2.0%

Southwest

465

505

8.6%

Valley

1,666

1,736

4.2%

West Central

2,604

2,648

1.7%

Other

8

10

25%

ALL of Virginia

31,590

32,949

4.3%

The chart above compares 2015 third quarter sales to 2016 third quarter sales, by region. The greatest year‐over‐year increases occurred in the Central and Southwest regions. Performance metrics are relative to the absolute number of sales, so less dense regions with increasing sales may show a relatively higher growth percentage. All but one of the eight regions experienced growth from the same period last year, for a statewide aggregate jump of 4.3 percent.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

6

2016 Third Quarter

Median Residential Sales Price

$270,000

$279,000

$249,685

$255,088

$265,000

$274,950

$247,550

$251,000

$260,000

$267,000

$235,000

$249,000

$263,583

$268,242

$300,000 $250,000

1.9 %

$200,000 $150,000

Median Sales Price

$350,000

Single Family Homes, Townhomes, Condos

3.8 %

2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Relative to the second quarter of 2016, median price fell by 3.2 percent, from $279,000 to $270,000.

A decline in price from the second to third quarter is typical as the industry cycles away from the summer peak and into winter months. Median price declined seasonally between the second and third quarters of last year by nearly the same percent (3.6 percent, from $274,950 to $265,000).

In comparison to last year’s third quarter, aggregate median price rose by 1.9 percent. Relative to the third quarter of 2014, price has risen by 3.8 percent. Year‐over‐year increases in price reflect buyer motivation propelled by the relatively limited inventory and the continued availability of low‐ cost financing. That the increases are relatively modest and sustained indicates normalized growth, rather than a market bubble.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

7

2016 Third Quarter

Regional Changes in Median Sales Price 2015 Q3 vs. 2016 Q3 0.0%

+3.7 %

+2.9 % +4.0 %

+2.5 % +8.4 %

+1.0 %

+8.2 %

Region Central

2015 Q3 225,000

2016 Q3 234,000

4.0%

Eastern

204,000

210,000

2.9%

Hampton Roads

227,656

229,950

1.0%

Northern

400,000

400,000

0.0%

Southside

97,000

105,000

8.2%

Southwest

115,000

124,700

8.4%

Valley

189,900

197,000

3.7%

West Central

164,900

169,000

2.5%

Other

93,600

102,500

9.5%

ALL of Virginia

$265,000

$270,000

1.9%

Median sales price increased year‐over‐year in every region except Northern Virginia, where it remained static. Because Northern Virginia accounts for a substantial portion of overall sales, its median price has a weighted effect on the performance of aggregate median price.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

8

2016 Third Quarter

Quarterly Residential Sales Volume ($B) Single Family Homes, Townhomes, Condos

Billions of Dollars of Residential Sales

$14 $12 $10 $8 $6 $4

5.8 %

$2 $0 2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

2016 Q2

2016 Q3

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 third quarter of 2016 rose by 5.8 percent year‐0ver‐year, from $10.227 billion to $10.821 billion. Volume is amplified year‐over‐year by increases in both price and the number of transactions.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

9

2016 Third Quarter

Annual Sales Volume by Quarter Single Family Homes, Townhomes, Condos Q1

Q2

Q3

Q4

$40 $35 $7.830 $6.959

$7.405

$10

$9.964

$5 $5.573

$9.553

$5.410

$10.789

$6.247

Through Q3: $27.264

$15

$9.056

$24.020

$9.335

Through Q3:

$20

6.9 %

$10.227

$10.821

$11.892

$6.441

Through Q3: $29.155

$25 Through Q3: $24.872

Billions

$30

$0 2013

2014

2015

2016

Year‐to‐date volume (ending September 30) has risen 6.9 percent to $29.155 billion, over $27.264 billion at the same point in 2015, and 21.4 percent from the same point in 2014 ($24.020 billion). The continued improvement over prior year quarterly comparisons illustrates gradual, sustained growth.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

10

2016 Third Quarter

Price Distribution of Residential Home Sales Single Family Homes, Townhomes, Condos 2015‐Q3 522 571

$1 M+

9.4%

979 1,037

$750 K ‐ $1M

2016‐Q3

5.9%

3,495 3,654

Price Range

$500K ‐ $750K

3,178 3,337

$400K ‐ $500K

4.5% 5.0%

5,174 5,602

$300K ‐ $400K

8.3%

7,565

$200K ‐ $300K

7,759 7,997 3.1%

$100K ‐ $200K 2,918 2,511

0 ‐ $100K

8,240 8.9%

0

1,000

2,000

‐13.1%

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Year‐0ver‐year home sales increased in every category except the lowest ($0‐$100K), where restricted inventory limits the number of sales possible. Sales in ranges below $750,000 represent the vast majority of transactions in Virginia and are the clearest indicator of market performance.

Growth was particularly strong in the ranges from $200k to $400k.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

11

2016 Third Quarter

Average Days on the Market Single Family Homes, Townhomes, Condos

Average Days on the Market

120

90

89

83 73 66

81 68

67

73

77 68

83

68

63

61

60

‐ 10.3 %

30

0 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

The average number of days on the market in the third quarter of 2016 decreased from the same quarter last year by 10.3 percent. Declining days on the market reflect sustained demand and limited inventory, as buyers continue to transact with urgency. Historically, time on the market lengthens as the calendar progresses past the summer peak; but this year, average days on the market actually declined from the second quarter to the third, suggesting that motivated buyers are acting rapidly to take advantage of replenished inventory and current low interest rates.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

12

2016 Third Quarter

Monthly Residential Sales VIRGINIA (All MLS‐Reported Home Sales*)

UNITED STATES (Existing Home Sales*)

600,000

16,000 14,000

484,000

471,000

500,000

12,000 400,000

10,000 9,857

9,566

8,000 6,000

300,000 200,000

4,000 100,000

2,000 0

0 Aug‐15 Sep‐15 Oct‐15 Nov‐15 Dec‐15 Jan‐16 Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16

Jul‐16

Aug‐16 Sep‐16

The changes in the pace of Virginia home sales in the third quarter tracked the changes in the pace of sales in the United States as a whole.

Monthly Residential Median Sales Price UNITED STATES (Existing Home Sales*)

VIRGINIA (All MLS‐Reported Home Sales*)

330,000 280,000

$262,500

$251,930

230,000 $234,200 $221,700

180,000 130,000 80,000 Aug‐15

Sep‐15

Oct‐15

Nov‐15

Dec‐15

Jan‐16

Feb‐16

Mar‐16

Apr‐16

May‐16

Jun‐16

Jul‐16

Aug‐16

Sep‐16

Virginia median price changes were similar to the changes in the median of existing‐home sales prices nationally for the third quarter of 2016. Both Virginia and the United States as a whole showed a slight decrease in median price, typical of seasonal tapering. *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.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

13

2016 Third Quarter

Virginia Unemployment Rate Source: Bureau of Labor Statistics 6.0% 5.5%

5.4%

5.3%

5.0%

5.3%

5.1%

4.9%

4.8%

4.5%

4.5% 4.2%

4.0%

4.2%

4.1%

3.9%

3.7%

3.5% 3.0%

2013‐Q4 2014‐Q1 2014‐Q2 2014‐Q3 2014‐Q4 2015‐Q1 2015‐Q2 2015‐Q3 2015‐Q4 2016‐Q1 2016‐Q2 2016‐Q3

The Virginia unemployment rate rose in the third quarter, but remains low relative to prior year benchmarks. Virginia unemployment continues to track below the national average. Low unemployment is correlated with bolstered consumer confidence.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

14

2016 Third Quarter

Average 30‐Year Mortgage Interest Rates Source: FreddieMac 4.60% 4.44% 4.30%

4.36% 4.23%

4.20%

4.14% 3.97%

3.95% 3.83%

3.80%

3.90% 3.74%

3.72%

3.59% 3.45%

3.40%

3.00% 2013‐Q3

2014‐Q1

2014‐Q3

2015‐Q1

2015‐Q3

2016‐Q1

2016‐Q3

Average 15‐Year Mortgage Interest Rates Source: FreddieMac 3.60% 3.40%

3.48% 3.35%

3.40% 3.32%

3.20%

3.27% 3.18%

3.15% 3.01%

3.00%

3.06%

3.13% 3.03% 2.85%

2.80%

2.75%

2.60% 2.40% 2.20% 2013‐Q3

2014‐Q1

2014‐Q3

2015‐Q1

2015‐Q3

2016‐Q1

2016‐Q3

Average 30‐year and 15‐year fixed mortgage interest rates decreased in the third quarter for the fifth consecutive period. While the prospect of a rate increase by the Federal Reserve Bank has intensified, continued low financing rates should motivate buyers to enter the market.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

15

2016 Third Quarter

The Virginia Association of REALTORS® (VAR) is the largest professional trade association in Virginia, representing approximately 32,000 REALTORS® engaged in the residential and commercial real estate business. VAR 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.

All inquiries regarding this report may be directed to:

Jenny Wortham Virginia Association of REALTORS® Jenny@VARealtor.com 804‐262‐3755

or

Martin Johnson Virginia Association of REALTORS® Martin@VARealtor.com 804‐249‐5708

The numbers reported here are preliminary and based on current entries into multiple listing services. Over time, data may be adjusted slightly to reflect increased reporting. Information is sourced from multiple listing services across Virginia and is deemed reliable, but not guaranteed.

Published by the Virginia Association of REALTORS Data recorded October 12, 2016

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