HARRISONBURG — The number of homes for sale in Harrisonburg and Rockingham County dropped by 22% in August compared to the same month last year, according to the most recent data from the Harrisonburg-Rockingham Association of Realtors.
The data illustrate how tight the local real estate market has become.
In August 2018, there were 343 homes for sale in the Harrisonburg area, while one year later, there were only 267 homes on the market, said Bob Hill, CEO of the Harrisonburg-Rockingham Association of Realtors.
Hill described the drop in available housing year over year as “significant.”
Despite the drop when compared to last year, the number of homes for sale has not fluctuated significantly in 2019, Hill said.
The highest number of available properties in Harrisonburg and Rockingham during 2019 was 277 in May and the lowest was 255 in February, according to association data.
Lisa Sturtevant, the chief economist of Virginia Realtors, agreed that the drop in Harrisonburg was large.
Across the state, there were 51,190 homes for sale at the end of August 2018, while there were 46,267 at the end of August 2019 — a decrease of 9.6%, according to the most recent monthly Virginia Realtors home sales report.
Sturtevant said the decline was large enough to catch her attention.
“It surprised me enough to double-check the data,” she said.
Across the Commonwealth, Virginians are more hesitant to put their home on the market for a variety of reasons, she said.
Some reasons are regional. In Northern Virginia, for example, one of the busiest real estate markets in the state, online retail giant Amazon is setting up its second headquarters in Crystal City.
Residents there may be waiting for home values to rise due to the project before putting their houses on the market, according to Sturtevant.
Declining consumer confidence could also be contributing to the low supply, she said.
The metric declined in September after also declining in August, according to the Conference Board, a nonprofit business research organization.
“When consumer confidence starts to get a little shaky, people tend to hold back on major decisions like selling a house,” she said.
A compounding factor is low interest rates, which encourage people to stay in their homes to keep a good payment, Hill said.
“The low rates aren’t bringing people into the market [for] purchases but it’s having an affect on refinancing,” she said.
In August 2018, the interest rate for a 30-year fixed-rate mortgage was 4.6% and rose for several months before declining to 3.55% by August 2019, according to data from Freddie Mac.
Also, with high prices in the housing market due to the shortage, many people are staying in their homes instead of risking moving, according to Sturtevant.
“Instead of selling and buying a new, bigger home, people refinance at 3.5% and put an addition on or invest in their home,” she said.
Builders also cannot simply build new homes, as they are trapped by high labor and materials costs, Hill said.
Materials prices are increasing due to the rebuilding efforts in the wake of natural disasters across the country, Hill said.
And all of these factors, and maybe more, are contributing to the housing shortage, he said.
“It’s very complex — there are many pieces to the puzzle here,” Hill said.