Home Prices Rise as Sales Slow: February 2025 Housing Market Report

The Washington, D.C. metro housing market saw a noticeable slowdown in February 2025 amid economic uncertainty, federal workforce reductions, and shifting mortgage rates. New pending sales dropped by 9.5% year-over-year, marking the slowest February contract activity since 2008. Inventory, however, continued to expand, offering some relief to buyers who have faced historically tight supply in recent years.

Despite softer contract activity, home prices in the region continued to rise, with the median sold price reaching $597,000, a 6.6% increase from last year. While higher inventory levels could lead to more balance in the market, the region remains competitive, and buyers must be prepared to act quickly on well-priced properties.

Key Market Stats (February 2025 vs. February 2024)

• Closed Sales: 2,956 (-4.1%)

• Median Sold Price: $597,000 (+6.6%)

• Median Days on Market: 11 days (+1 day)

• New Pending Sales: 3,485 (-9.5%)

• New Listings: 4,099 (-2.6%)

• Active Listings: 6,857 (+29.9%)

• Months of Supply: 1.64 (+0.35 months)

• Showings: 78,655 (-16.7%)

The data highlights fewer transactions and slower demand, with showings down nearly 17% compared to last year. However, inventory levels have increased by 30%, providing buyers with more options than they had a year ago.

Inventory Growth & Market Conditions

At the end of February 2025, there were 6,857 homes for sale in the D.C. area, a significant 30% increase from the previous year. This is a notable shift, as inventory expansion across all housing types suggests a market adjusting to slower buyer demand.

One key trend is that only condos have returned to pre-pandemic listing levels, indicating that detached single-family homes and townhomes are still experiencing supply constraints. More inventory combined with softer price growth could create better conditions for buyers heading into the spring market.

Pricing Trends & Market Demand

The median home price of $597,000 represents a 6.6% increase from last year, continuing a trend of steady price growth. Over the past five years, home prices in the D.C. metro region have surged by over 40%, reflecting strong long-term appreciation.

While prices are still rising, homes are staying on the market slightly longer. The median days on market increased to 11 days, up from 10 days last year. However, compared to January 2025, when homes took an average of 23 days to sell, market activity appears to be picking up.

This suggests that motivated buyers are still active, but many are taking more time to make purchasing decisions compared to the ultra-competitive environment of recent years.

Local Market Performance

Areas With Increased Activity

Loudoun County, VA: The only major jurisdiction where new pending sales increased (+17.3%), also saw a 26.8% rise in new listings.

Montgomery County, MD: New listings increased by 2.3%, one of the few areas with an uptick in seller activity.

Areas With Slower Sales

Washington, D.C.: New pending sales dropped 14.4% year-over-year.

Prince George’s County, MD: One of the biggest slowdowns in the region, with a 22.5% decline in new pending sales.

Arlington County, VA: New pending sales fell 14.6%, indicating a cooling in the Northern Virginia market.

Despite regional variations, most of the D.C. metro area saw declining contract activity, reinforcing a broader market slowdown.

What This Means for Buyers & Sellers

For Buyers

• More inventory and longer days on market mean better negotiating power.

• Rising prices suggest that waiting too long could still mean paying more for a home in the future.

• Mortgage rates remain a wildcard, so buyers should consult lenders to determine the best time to lock in a rate.

For Sellers

• Proper pricing is critical—overpriced homes are likely to sit longer in this cooling market.

• Homes in desirable locations and price points are still moving quickly, especially if priced competitively.

• As competition increases in the spring market, sellers should be prepared to offer incentives like closing cost assistance to attract buyers.

Looking Ahead: What to Expect This Spring

As we move into the spring homebuying season, market conditions will depend on economic trends, interest rates, and buyer confidence. Here’s what to watch for:

• Will inventory continue to rise? If so, buyers could have more leverage.

• Will home prices stabilize? So far, growth has been steady, but a slowdown in appreciation is possible.

• How will federal workforce changes affect demand? Uncertainty in government hiring and remote work policies could impact buyer activity in the D.C. region.

While 2025 has started with slower sales and more listings, the market remains dynamic. Buyers and sellers should stay informed, act strategically, and work with experienced real estate professionals to navigate the evolving landscape.

Final Thoughts

Last month, the D.C. Metro market showed clear signs of cooling, with declining pending sales and an increase in inventory. However, home prices continue to rise, indicating that demand is still strong despite economic uncertainty.

Buyers should take advantage of increased inventory and a slightly slower market, while sellers need to be more strategic in pricing and marketing their homes.

If you’re thinking about buying or selling in the D.C. metro area, let’s discuss the best strategy for your situation. Contact me today to get started.

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