The local real estate market in May showed signs of cooling, with the largest year-over-year decline in units sold since 2017 and the first drop in total sold volume in years. While demand may be abating due to rising interest rates, inflation pressures, and economic uncertainty, prices continue to skyrocket in many markets. May closed out the month with a more than 6% decrease in total sold dollar volume, going from approximately $365 million in May of 2021, down to just over $343 million in May of 2022. Fueling the decline in total volume was a steep decline in market activity. Units sold declined nearly 16%, going from 889 in May of 2021 and declining to 749 in May of 2022. At the same time that demand is waning, median sold price posted another big year-over-year jump, clocking in at $436,000 in May of 2022 compared to $390,000 in May of 2021.
FAAR Board of Director Lauren Tate comments, “The May 2022 market is seeing a slight shift. While inventory remains low, it is starting to become a more level playing field for buyers, impacting demand due to the increase of mortgage rates. In previous months, sellers held the cards pulling multiple contracts, driving over list price offers to exclude enticing key contract elements such as waived appraisals, appraisal gaps, no contingencies and no seller contributions to sway the seller to pick the best offer. Today we are seeing inventory remain on the market slightly longer with price adjustments, which is confusing those sellers who have expectations that the market will mimic previous months. The market will continue to level out due to the uncertain economic changes.”
The decline in units sold was seen in every jurisdiction in the FAAR footprint. Orange County was down the least from last year with a 6% decline while Caroline County took the biggest hit with a nearly 42% decline in units sold. These declines translated into a decrease in total sold dollar volume in all areas but one. Spotsylvania County managed to hold onto a near identical sales volume as May of 2021, with a scant 0.08% increase. Despite decreasing sales volume, prices are staying high in all of our jurisdictions. Caroline County saw its third highest median price on record coming in at $320,000 while Spotsylvania’s median price skyrocketed over 21%, coming in at $443,000 in May compared to $365,505 last year.
Days on market, the time it takes from when a listing enters the market until it receives a ratified contract and is removed from active status on the multiple listing service, stayed flat from last year at 11 days.
Active listings have shown year-over-year growth since July of 2021 with May posting another 46% increase in homes on the market. There were 838 homes on the market at the end of May compared to 573 last year. New listings were down this May by about 15%, with 1,024 new homes coming on the market compared to 1,200 last May. New pending sales were down over 23% and overall pending sales are down 30%, indicating that continued supply challenges
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