The market finds its balance
Welcome to Market Talk. I’m Liz Moore, President of Liz Moore & Associates, and as we close out the third quarter of 2026, the housing market continues to give us a little bit of everything.
We have more homes for sale. Prices are still rising, albeit slowly. Buyers have more choices and more negotiating room. And yet, after a relatively active first half of the year, higher mortgage rates began to put the brakes on sales activity as summer came to a close.
In many ways, this is the market we’ve been anticipating for several years: more balanced, more deliberate, and far less frantic.
It is not a buyer’s market everywhere, nor is it the seller’s market we grew accustomed to during the pandemic years. Instead, we are settling somewhere in between - and that means strategy matters more than ever.
The big picture: Still ahead of last year
August marked an important shift in Virginia’s housing market.
There were 8,985 closed sales across the Commonwealth, down 4.6% from August 2025. It was the first year-over-year decline in statewide sales activity in nearly a year. But one month doesn’t tell the whole story.
Through August, Virginia home sales remain 3.6% ahead of the same period last year, with 71,971 sales compared with 69,537 in 2025. Year-to-date sold volume is also up 7.5%, representing approximately $2.8 billion more real estate changing hands than at this point last year.
So, while August clearly lost some momentum, 2026 overall has still been a more active year than 2025. That distinction is important.
Key takeaway: The market is slowing from earlier in the year, but it has not reversed course.
Mortgage rates are back in the driver’s seat
Unfortunately, interest rates have once again become a major part of the conversation.
The average 30-year fixed mortgage rate reached 6.95% by mid-September, compared with 6.26% a year earlier and 6.16% at the beginning of 2026. According to Virginia REALTORS®, mortgage rates moved above year-ago levels in early August, and the effect began showing up almost immediately in both closed and pending sales.
Pending sales fell 3.1% year over year in August, the second consecutive month of decline. That suggests some buyers who were active earlier this summer may be stepping back to reassess affordability.
We’ve seen this movie before. A half-point move in interest rates can have a meaningful impact on a monthly payment, particularly for first-time and move-up buyers.
And yet, buyers haven’t disappeared. They’ve simply become more thoughtful about what - and how much - they’re willing to buy.
Trend to watch: Mortgage rates will likely be the biggest wildcard as we move through the final quarter of 2026.
Inventory: The biggest change in the market
Perhaps the most significant shift this year continues to be inventory.
Virginia ended August with 28,560 active listings, an increase of 13.8% from last year. That is the largest number of homes available in an August market since 2019. In addition, 77% of Virginia cities and counties had more active listings than they did a year ago.
Months of supply climbed from 2.9 months last August to 3.2 months this year. For perspective, Virginia had just 1.6 months of inventory in August 2022. Supply has essentially doubled in four years.
That’s a significant shift, but it’s important to put it in context.
Three months of inventory does not represent an oversupplied market. What it does represent is choice.
Buyers who once had to compete for whichever home happened to become available can now compare properties. They can consider condition, location, upgrades, and price. And in many cases, they can negotiate.
For sellers, that means simply putting a house on the market is no longer enough.
Prices: Still moving up
The surprise for some consumers may be that increasing inventory and slower sales have not translated into falling home prices. Yet, Virginia’s median sales price reached $449,000 in August, up $19,000—or 4.4%—from August 2025. Nearly six in ten Virginia cities and counties experienced year-over-year price growth.
Look back just four years and the change is striking. Virginia’s August median price has risen from $373,900 in 2022 to $449,000 today.
That doesn’t mean every home or every neighborhood appreciated by the same amount. Real estate remains intensely local, and the statewide report shows meaningful differences from one region to another.
But broadly speaking, values have continued to hold up remarkably well despite higher rates and expanding inventory.
Why? Supply and demand still matter. Although buyers have more choices, Virginia is not swimming in excess inventory. And demand for desirable homes remains strong enough to support pricing.
Buyers have more leverage
We’re also beginning to see a subtle but important change in negotiating dynamics.
The statewide sold-to-list price ratio slipped to 99.2% in August, compared with 99.4% last year, and every price range averaged below 100% of list price.
Homes are taking a little longer to sell as well. Median days on market increased from 17 days last August to 19 days this year, and 60% of Virginia localities experienced longer marketing times.
Those may sound like small changes - and they are - but they reinforce the larger trend.
Buyers have time to think again.
Inspections, repairs, closing costs, and other contract terms that largely disappeared from negotiations several years ago are once again part of the conversation in many transactions.
That’s healthier for the market, even if it requires sellers to recalibrate their expectations.
What we’re seeing across our markets
One of the most interesting factors as we move into Q4 is just how uneven the market remains across the Commonwealth.
More than half of Virginia’s cities and counties experienced fewer sales in August, but Williamsburg and the Northern Neck were specifically identified among the areas where sales remained resilient and outpaced August 2025, even as statewide activity declined.
That reinforces something we see every day across our five offices: there really isn’t one Virginia real estate market.
Williamsburg can be moving in one direction while Richmond behaves differently. Waterfront property in the Northern Neck follows different demand patterns than suburban homes on the Peninsula. Virginia Beach has yet another set of economic and lifestyle drivers.
Even within individual markets, price point matters. A $400,000 home can be experiencing a very different market than a $1.5 million property just a few miles away.
That makes broad national - or even statewide - headlines increasingly less useful when making an individual real estate decision.
Pricing matters again
Perhaps the biggest message for sellers this fall is simple:
The market will no longer fix an ambitious asking price for you.
During the height of the seller’s market, low inventory often meant buyers would overlook condition, location compromises, or aggressive pricing simply because there were so few alternatives.
Today’s buyer has choices.
That doesn’t mean sellers need to discount their homes. Prices are clearly still appreciating. It does mean that the first few weeks on the market matter, and pricing correctly from the beginning has become increasingly important.
Homes that are well-prepared, professionally marketed, and priced appropriately can still generate excellent results.
Homes that miss the market may sit longer—and ultimately require an adjustment.
What does this mean for buyers?
For buyers, this may be one of the more interesting markets we’ve seen in several years.
Yes, mortgage rates are challenging affordability.
But buyers also have something they haven’t had in quite some time: options.
More inventory means more opportunity to find the right house rather than simply the available house. Longer marketing times can create negotiating opportunities, and fewer bidding wars may make the experience considerably less stressful.
There is a trade-off between interest rates and purchase price, of course. But buyers who are financially ready shouldn’t necessarily assume that waiting for lower rates will produce a better overall opportunity. Rates can change; the perfect property may not.
Looking ahead
We anticipate that elevated mortgage rates could result in a slower fall market than we saw last year. At the same time, prices are expected to remain supported by the supply-demand imbalance that still exists in many parts of the state, although appreciation may begin to moderate as inventory continues to grow.
That feels like a reasonable description of where we are headed:
More inventory. More negotiation. More differentiation between homes. And probably slower - but still positive - price growth.
After several extraordinary years, normal may finally be making a comeback.
And frankly, that’s not a bad thing.
