The pace of Virginia homes sales increased in February, but only by 3.15% despite decreasing unemployment and mortgage interest rates. Prices remained fairly stable and days on the market continued to increase, indicating low demand rather than restricted supply. So what is holding back demand? Even though the market is not picking up as fast as it did last year (sales are down 7.55% from February 2013), many housing economists predict that 2014 will be the strongest sales year since the Great Recession. Since interest rates and employment are working in the market’s favor, winter weather seems like the main barrier for buyers and is certainly a barrier for builders. Although access to credit may be slowing the housing recovery to some degree, we expect to see better performance in the Virginia housing market once we are free of snow and ice. Long-term decreases in unemployment, stable interest rates, stable prices, and new inventory coming onto the market should all bode well for spring sales.

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Analysis and commentary by Ted Koebel, Senior Research Associate and Mel Jones, Research Associate, of the Virginia Center for Housing Research at Virginia Tech

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