The housing market in the greater Piedmont region—an area covering the counties of Culpeper, Fauquier, Madison and Rappahannock—continues to show signs of softening demand as the first quarter comes to an end. Quarterly sales activity region-wide declined for the fourth time in a row compared to last year.

At the local level, the number of sales fell in Culpeper County, which has had declining sales since the summer of 2017. While sales activity slowed, the median sales price in the region continued to rise, a reflection of the tight supply of active listings on the market. The median sales price rose in all local jurisdictions in the regional footprint in the first quarter compared to the previous year.

It is taking longer to sell homes, on average, in the region. The inventory of active listings inched up in the first quarter, the third consecutive expansion of active listings in the region after nearly three years of a shrinking inventory. Despite the stabilizing level of listings, the overall supply of homes available for sale remains low compared to historical averages. Summary highlights from the market data this quarter include:

• The pace of sales continues to moderate compared to last year. There were 2 percent fewer sales in the greater Piedmont regional footprint in the first quarter, the fourth consecutive quarterly drop in sales.

• The median sales price continues to climb at the regional level and within all jurisdictions. The first quarter median sales price was up $20,000 from a year ago, a 6 percent increase.

• Homes are taking longer to sell compared to last year in many parts of the region. The average days on market for the region was up 11 days from a year ago.

• The inventory of active listings in the region continues to expand after several years of shrinking. The total months of supply was 7.2 months in the first quarter, up from 6.6 months a year ago.

Sales

Sales activity in the region continues to be slower than a year ago, though the pace of decline has moderated in the first quarter. There were 376 sales in the region during the first quarter of 2019, which is nine fewer than this time last year, representing a 2.3 drop. Sales have been declining or flat each quarter for more than a year in the region. At the local level, Culpeper County was the only jurisdiction to have fewer sales than a year ago, which was the primary driver of the lower region totals because the county has around one-third of the region’s sales each quarter.

There were 127 sales in Culpeper County in the first quarter of 2019, down 15 percent from a year ago—a decline of 22 sales. Sales activity has been trending down in the county since the summer of 2017.

While the pace of sales has slowed, home prices continue to climb. The median sales price in the region was $345,000 in the first quarter of 2019, up 6 percent from this time last year, an increase of $20,000. Sales prices have been rising steadily each quarter in much of the region over the past several years. The rising prices are reflective of the low level of active listings, which is putting upward pressure on price points through much of the four-county region. For example, the median sales price in the region has increased more than $60,000 since the first quarter of 2015, while the months of supply of active listings has fallen from 9.4 to 7.2 during this same time period.

At $315,000, the median sales price in Culpeper County during the first quarter is up 6 percent from a year ago, an $18,000 gain. Sales prices have been trending up in the county for several years.

There were 1,181 active listings at the end of the first quarter of 2019 in the region, up a modest 1 percent from last year, an increase of 12 active listings. The widespread declines in the supply of active listings has been moderating and, in some cases, inventories have been increasing in some parts of Virginia since midway through 2018. The inventory of active listings in the four-county region has been trending up over the past few quarters relative to last year, which could signal a changing pattern in the coming months.

The supply of active listings continues to expand in Culpeper County, a trend that began in the summer of 2018. There were 409 active listings on the market at the end of the 1st quarter, an increase of 12 listings.

On average, it is taking longer to sell homes in the region compared to this time last year. The average days on market was 90 days in the first quarter of 2019, which is 11 days longer than the 1st quarter of last year. Locally in the four-county area, Rappahannock County was the only jurisdiction to have a drop in the average days on market compared to last year. The declining sales and sold volume along with rising days-on-market could reflect softening demand in some local markets within the region. Similar trends have occurred in some of the state’s other housing markets in recent months.

After several years of declines, the average days on market increased for the 2nd quarter in a row in Culpeper County compared to last year, a reflection of changing market conditions. On average, homes sold in 88 days in the county in the first quarter of 2019, which is 25 days longer than a year ago.

Economic Overview

The strength of the local economy and the pace of job and income growth in the region are critical determinants of the health of the housing market. Economic growth in the greater Piedmont region (Fauquier, Culpeper, Madison, and Rappahannock counties) has slowed in recent years; however, job growth remains steady. Between September 2017 and September 2018 (the latest data available), the region added 625 new jobs.

The biggest gains in the Greater Piedmont region have been in the Administrative and Building Support Services sector (+371 jobs), along with the Health Care and Social Assistance (+208 jobs) and Professional and Technical Services (+185 jobs) sectors. The region has experienced a drop in Retail Trade jobs (-196 jobs), mirroring a statewide trend.

The labor market in the region remains quite tight. The regional unemployment rate was just 2.9 percent in February 2019 (below the statewide unemployment rate of 3.2 percent). While the regional unemployment rate edged up very slightly in January 2019, the primary reason is more people entering the labor force.

Consumer confidence remains strong. People feel positive about their present economic situations, though there was a drop in that measure in March. In addition, late last year and early this year, there was a slight drop in the measure of confidence about future economic conditions, likely a reaction to the federal government shutdown and uncertainties around the prospects for longer-term shutdowns. The future expectations measure rebounded in February and remained above 100 in March, indicating that households tend to feel optimistic as they look ahead.

Interest rates have fallen in the first quarter of 2019 and stand at historically low levels. Late last year, there were concerns that interest rates were poised to rise in 2019. However, the Federal Reserve Board has given indications that rate increases will be unlikely, at least in the first half of the year. As a result, home buyers and sellers should expect mortgage rates to remain low throughout the spring market.

Nationally, homes sales have been up for both new and existing homes, with notable increases at the end of last year. At the same time, while home prices continue to rise nationally, the pace of price increases has slowed recently. Despite this more moderate price growth, economic fundamentals at the national level, including strong job growth, steady wage growth and low interest rates, suggest that housing market conditions nationally will remain stable. A lack of inventory and insufficient new housing supply continue to be constraints on the market nationally, as well as in Virginia.

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