May Highlights:

• AN IMPORTANT MARKET SHIFT IS UNDERWAY
  
  
• Northern Virginia Inventory is RISING this Spring
  Despite rising inventory, the median home price in Fairfax County reached an all-time high in May ($787,000) breaking the former high ($780,000) reached in June 2024. However, home prices in Northern Virginia may be showing signs of plateauing as price internals are decelerating. The price increase for YTD 2025 compared to 2024 has been more than halved in the first five months of the year. Prices opened in January UP 11.2% but have deflated to UP 5% by May. The growing Active Weekly Listings trend that began in March 2024 has caused marked changes in inventory rising 50% over last year levels. This is further explained a few paragraphs below.
  
  
• Buyer Showings DOWN 8% in 2025
  Buyer showings (demand) continued to hit weekly highs in May tracking seasonal expectations. While showings for the year are DOWN 8.3% compared to 2024, May showings were UP 2.3% over May 2024. The market just passed its usual Memorial Day holiday inflection point where buyer showings generally top and begin the downtrend to year-end.
  
  
• Listings DOWN 5% from April to May
  This is a moderate departure from the UP 1% in May 2024 and typical average UP 1% during the last 6 years.
  
  
• May Listings DOWN 21% vs. 5-year Average
  Seller listings stabilized in 2024 resisting the continued downtrend experienced in recent years. However, listings remain down compared to long-term averages (-21%). Notably, with the 5-year average now excluding 2019 from the calculation, the negative number has improved about 20 points from last year's minus mid 30's. Northern Virginia homes sold in Jan-May (10,875) are DOWN 1% compared to last year (11,038).
  
  
• "Rate Locked Sellers" are UNLOCKING Increasing Inventory
  In the wake of rising interest rates beginning in 2022, sellers largely "stayed in place" in 2023 and repeated the same in 2024. Finally, New Listings in Jan-May (16,654) are UP 10% compared to Jan-May 2024 (15,140). The typical home seller is now 63 years old, a record high. This compares to age 54 in 2014 and age 45 in 2007.
  
  
• Contract Ratio FALLS to 0.70 (shift toward buyers)
  Listings Under Contract represent 41% of the total May listings compared to those available and Active for sale at 59%. This is a significant departure from May 2024 when the contract ratio was 1.00 (50% Under Contract and 50% Active for Sale). The Contract Ratio is uncharacteristically buyer-advantaged for May and speaks to the higher inventory. This buyer-advantaged Contract Ratio runs directly to the relatively higher frequency of Seller Price Declines (14% of Active listings). The importance of correctly pricing a home in today's market cannot be overstated. 
  

• Inventory INCREASES 63% vs. May 2024
  Inventory is finally rising in Northern Virginia. May inventory was 1.55 mos, 63% higher than May 2024 inventory of 0.95 mos. For several months, Active Listings have been running markedly higher than the previous year (currently 46% higher - 3,000+ listings in the DC Metro area). This presents a relatively more balanced buyer-seller market than experienced in 2020-24 when May inventory ranged from a slim 0.73 to 1.22 mos.
  
  
• Sold-to-List Price Ratio DOWN with Rising Inventory
  Buyer contract prices averaged 100.1% of Seller Asking in May. This is down significantly from the 102.3% experienced in May 2024. The compressing Sold-to-List Price ratio is consistent with the falling Contract Ratios, seller price declines, rising Inventory, influx of buyer contract contingencies, and the more balanced market seen this spring. The current contract cancellation rate has increased to 16%. This is markedly higher than the 10% this time last year.
  
  
• Speed to Contract is Swift; But DOWN from 2024
  Speed to contract is generally fast with 63% of the 2,955 homes sold in May transacting in the fastest range (0 to 10 days). By contrast, 15% of sales exceeded 30+ days on market. However, there is a significant difference between now and last year. In May 2024, 76% of homes sold in the fastest range (0 to 10 days), while only 63% in May 2025, down 13 points.

• Fed May Meeting: RATE STEADY at 4.25%
  The Fed met on May 7 and decided on no rate cut. The next meeting is scheduled tomorrow, June 18. The futures market is presently pricing a 99% chance of no rate cut at tomorrow's meeting.
  
  
• Headline Inflation RISES to 2.4%, FALLS 0.1% Apr to May
  As reported last week, inflation rose slightly from April 2.3% to May 2.4% year-to-year. Inflation month-to-month declined from 0.2 to 0.1%. Both numbers were in-line with expectations. "Core Inflation" held steady at 2.8%, its lowest level since March 2021. Core inflation includes more volatile energy and food prices.
  
  
• Conventional Mortgage Rate FALLS to Upper 6's
  Mortgage rates continue to trade in the 6.75 to 7% range for much of 2025. Rates have been and will continue to be volatile with very high difficulty trying to time the market. VA/FHA rates are running about 1/2 point lower at 6.375%. Conforming rates are running about 1/4 point lower than the upper 6's jumbo rates (jumbo loan is > $1,209,750).