NoVa Housing Market to Find Balance in 2026, But Affordability Bites

FAIRFAX, VA – December 18, 2025 – The Northern Virginia housing market, after years of frenetic activity and soaring prices, is poised to enter a period of greater stability in 2026. A new forecast from the Northern Virginia Association of Realtors® (NVAR) and George Mason University's Center for Regional Analysis projects a more balanced landscape, marked by moderating price growth, rising inventory, and mortgage rates expected to hover around 6%.

While this signals a welcome shift away from the market's recent volatility, the forecast underscores a persistent and deepening challenge: housing affordability. The coming year will present a dual reality for the region—a healthier, more predictable market that nonetheless remains out of reach for many residents.

"The Northern Virginia market is entering a more stable phase," said NVAR CEO Ryan McLaughlin. "While affordability pressures continue, the fundamentals of our region — strong employment, a diverse economy, and sustained demand — position us well for a year of steady, sustainable growth."

A New Era of Stability?

The forecast suggests 2026 will be a "reset year," transitioning the market from a seller-dominated frenzy to a more equitable environment. This stabilization is driven by two key factors: a significant increase in housing supply and more predictable borrowing costs.

Inventory levels across Northern Virginia have been climbing steadily. By spring 2025, the region had already seen a nearly 70% year-over-year increase in homes for sale, a trend projected to continue. This influx of properties provides buyers with more choices and eases the intense bidding wars that defined the post-pandemic market.

"Northern Virginia's housing market stands out in its resilience, reflecting underlying demand among households for homeownership, which remains a solid long-term investment for NOVA households," said Terry Clower, Ph.D., Director of the George Mason University Center for Regional Analysis. "The regional housing market may have pulled back from its frenetic pace of the past few years, but prices will remain stable, and we will see a healthier balance between buyers and sellers in 2026."

Mortgage rates are also expected to contribute to this newfound equilibrium. While the days of sub-3% rates are gone, the NVAR/GMU forecast of rates stabilizing around 6% aligns with national predictions from entities like Fannie Mae. This consistency, even at a higher threshold, allows potential buyers to plan with greater certainty than they could amidst the rapid rate fluctuations of previous years.

The Federal Factor: Shutdowns and Workforce Shifts

Northern Virginia's housing dynamics are uniquely intertwined with the federal government, and recent events have significantly shaped the market's trajectory. The federal government shutdown in October 2025, though temporary, sent ripples of uncertainty through the region, causing delays in mortgage processing for VA and FHA loans and prompting some buyers to pause their searches.

More profoundly, shifts in the federal workforce have directly impacted housing supply. Buyout offers accepted by tens of thousands of federal workers in early 2025, coupled with ongoing discussions about workforce reductions, have spurred a wave of selling, particularly from retirees and those relocating. This trend is a key reason why housing inventory in Northern Virginia has swelled by over 41% year-over-year, a rate more than double the average for the broader Mid-Atlantic region.

Despite these pressures, the region's diverse economy—powered by technology, defense contracting, and healthcare—has provided a crucial buffer. The market has demonstrated resilience, absorbing the increased inventory without a major price collapse, underscoring a deep-seated demand for housing in the area.

A Patchwork of Local Markets

A closer look at the 2026 forecast reveals that Northern Virginia is not a monolith but a patchwork of distinct local markets, each with its own trajectory.

In Fairfax County, the region's largest jurisdiction, single-family home prices are expected to see a modest 1.9% increase, tempered by a substantial 35.8% surge in inventory. This suggests a market where buyers will have significantly more leverage than in years past.

Arlington County and Alexandria City are projected to experience stronger price appreciation, with single-family home prices rising 3.8% and 4.2%, respectively. Even with inventory climbing over 20% in both locales, strong demand in these close-in urban centers continues to support property values.

Further out, the picture is more varied. Loudoun County is set for healthy single-family home price growth of 3.3% on the back of strong demand. Prince William County, however, is expected to see prices remain flat, with a slight decline of 0.2%, even as sales activity picks up. Townhomes in Prince William are forecast to rise 1.9%, highlighting a flight to more affordable property types.

The most notable outlier is Stafford County, where the median price for single-family homes is forecast to decline by 4.6%. Waning demand combined with a 33.3% increase in inventory is creating a distinct buyer's market, offering a potential pocket of relative affordability for those willing to move further south.

The Persistent Affordability Crisis

Even as the market finds a healthier balance, the core issue of affordability looms larger than ever. For many first-time buyers and middle-income households, the dream of homeownership in Northern Virginia remains elusive.

Despite the region boasting one of the nation's highest median household incomes at nearly $150,000, the cost of living is exceptionally high. Recent studies indicate a single adult in Virginia needs an annual income over $106,000 to live comfortably, while a family of four requires more than $241,000. With median home prices in core counties like Arlington and Fairfax projected to hover between $750,000 and $850,000, a significant portion of the population is effectively priced out.

This affordability gap is a primary driver of domestic out-migration, as residents seek more affordable lifestyles elsewhere. In response, a coalition of non-profit organizations like the Northern Virginia Affordable Housing Alliance, Wesley Housing, and Cornerstones are working to expand the supply of affordable rental and for-sale homes. These groups advocate for policy changes and partner with local governments to address the crisis, but the scale of the problem remains immense.

As 2026 unfolds, the Northern Virginia housing market will present a complex landscape. For some, the increased inventory and stable rates will open doors that were previously shut. For many others, the "new normal" will be a market that, while balanced, continues to highlight the profound economic divisions within one of the nation's most prosperous regions.