Washington, D.C. and Northern Virginia Real Estate Braces for a Shift Amid Rising Inventory and Slowing Demand

By Chris Colgan, eXp Realty – Powered by PLACE | July 2025

As mortgage rates hover just below 7 percent and active listings surge across the region, the Washington, D.C. and Northern Virginia housing market is entering a new chapter—one marked not by frenzy, but by hesitation and leverage.

The June 2025 Bright MLS reports for both the D.C. metro and North Central Virginia reveal a market in flux. While home prices remain historically high, momentum is clearly slowing. Buyer activity is subdued. Sellers are no longer in firm control.

“This isn’t 2021 or even 2023,” said Chris Colgan, a Northern Virginia-based Realtor with eXp Realty, Powered by PLACE. “In places like Loudoun, Stafford, and DC proper, sellers have to play defense. Buyers are finally showing up with negotiation power.”

A Tale of Two Regions: Prices High, Power Shifting

The median sales price in the D.C. metro area reached $650,000 in June, up 1.6 percent year-over-year. But that modest gain belies deeper shifts in market behavior. Active listings rose more than 41 percent compared to last summer, and homes are sitting on the market for 12 days on average—five days longer than a year ago.

Loudoun and Frederick counties saw price growth, up 6.6 percent and 2.6 percent respectively. But core urban markets such as Arlington and Alexandria posted year-over-year price declines of 8.4 and 9.2 percent. Even Washington, D.C. itself recorded a slight price dip—down 0.3 percent to a median of $708,500.

In North Central Virginia, the median home price hit a record $515,000 in June, up 4 percent from 2024. But that figure may be masking signs of cooling. Closed sales fell 2.2 percent, and homes are taking longer to sell—11 days on average, up from seven days last June.

“The market isn’t collapsing—but it’s correcting,” Colgan said. “For the first time in years, buyers are asking for seller credits, negotiating inspections again, and walking away if the numbers don’t make sense.”

Rising Inventory Tests Seller Strategy

Inventory levels are climbing sharply, especially in suburban counties. In Fairfax County, active listings jumped 50 percent compared to June 2024. Stafford County saw a staggering 72 percent increase. Arlington and Alexandria, long considered tight supply zones, are now above pre-pandemic levels.

With supply up and demand tapering, pricing strategy has become crucial for sellers.

“There’s a huge difference between the homes that sell in seven days and the ones that linger for 30,” Colgan added. “The overpriced listings are sitting—and getting overlooked.”

The Rate Effect: Mortgage Volatility Reshaping Behavior

According to Freddie Mac, the average 30-year fixed mortgage rate was 6.9 percent at the start of July. That level, while stable, remains a deterrent for many would-be sellers who refinanced at historically low rates.

“Move-up buyers are frozen,” Colgan noted. “They’re reluctant to trade a 3.25% rate for 7%, especially if the math doesn’t add up.”

Pending sales across the region reflect this hesitation. In the D.C. metro area, new pending sales declined 1.7 percent in June. In North Central Virginia, they increased just 1 percent—still down 3.5 percent year-to-date compared to 2024.

Looking Ahead: A Market in Transition

Whether the housing market continues to soften—or simply stabilizes—may hinge on interest rates and consumer confidence heading into fall.

If rates hold steady or dip slightly, moderate buyer activity is expected to continue. If borrowing costs spike, more would-be buyers may sit out the remainder of the year.

“There’s still real demand in Northern Virginia,” Colgan said. “But affordability is limiting the pace. People aren’t in a rush, and sellers can’t price like it’s 2022.”

For now, the region appears to be settling into a slower, more balanced market—one where strategic pricing, staging, and expert negotiation matter more than ever.

Five FAQs About the June 2025 Housing Market

• Is the housing market crashing?
  No. It’s slowing, but not collapsing. Prices are softening slightly in some areas, but overall, the region is stable.
• Where are the biggest inventory increases?
  Arlington, Fairfax County, Stafford, and Prince William all saw major increases in listings—some above 50% year-over-year.
• What’s the average home price in the D.C. metro?
  $650,000 as of June 2025. In Northern Virginia counties like Loudoun and Fairfax, it’s closer to $750,000–$800,000.
• What does this mean for sellers?
  Sellers must price competitively and be prepared to offer concessions. Overpriced homes are sitting longer.
• Should I buy now or wait?
  If you find the right home and can afford today’s rate, it may be a good time to buy with less competition. But buyers should shop carefully and negotiate aggressively.

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