Richmond, VA Housing Market Update – February 2025
Keel Custom Homes Market Insight
As we enter 2025, Richmond’s housing market continues to evolve with increasing demand, rising inventory, and stabilizing mortgage rates. While affordability remains a challenge due to elevated interest rates and home prices, market conditions are expected to improve as more inventory enters the market and mortgage rates potentially decline.
At Keel Custom Homes, we help homebuyers navigate these market shifts and find the best opportunities for custom-built homes in Richmond. In this report, we analyze the latest market trends, mortgage rate forecasts, home prices, and inventory changes to help buyers and builders make informed decisions.
Richmond Housing Market Overview: Growth with Moderation
According to Virginia Realtors, the state’s housing market saw modest growth in 2024, rebounding from the slowdown in 2023. This trend is expected to continue into 2025, fueled by increased inventory and strong buyer demand.
Home Prices in Richmond Continue to Rise, But at a Slower Pace
The median home price in Richmond is now $375,000, reflecting a 4.2% year-over-year increase. However, price appreciation is expected to moderate as more inventory enters the market.
While home values continue rising, growth is likely to slow compared to 2024.
Increased inventory will help ease competition slightly, but housing demand remains strong.
Markets near job centers, like downtown Richmond and Short Pump, may see higher-than-average price growth due to return-to-office trends.
Inventory Levels: More Homes Coming to Market
One of the most significant changes heading into 2025 is rising inventory, which is helping boost sales activity despite high mortgage rates.
Richmond remains a seller’s market, but increased listings are creating new opportunities for buyers.
The average home spends just 11 days on the market before going under contract.
Multiple offers are still common, especially in high-demand areas like The Fan, Midlothian, and Glen Allen.
For buyers:
More choices will be available compared to previous years, but competition remains strong.
For builders:
Custom home construction is becoming a key alternative for buyers seeking flexibility and modern designs.
Mortgage Rate Trends & Buyer Affordability
Mortgage Rates Expected to Decline—Slowly
According to Virginia Realtors, mortgage rates are projected to decline modestly by the end of 2025, but the path will be volatile.
30-year fixed mortgage rate: 6.5% (slightly lower than mid-2024 highs).
15-year fixed mortgage rate: 5.8%, making refinancing a consideration for homeowners.
Rate fluctuations will impact buyer confidence—when rates dip, sales will surge, and when they rise, activity will slow.
How Buyers Are Adapting
Despite high mortgage rates, homebuyers are adjusting their strategies:
Considering adjustable-rate mortgages (ARMs) for initial lower payments.
Making larger down payments to reduce borrowing costs.
Exploring custom-built homes as a long-term investment, especially in suburban and rural areas.
New Construction & Custom Home Market Trends
Custom Homes Gaining Popularity as Inventory Expands
With existing home inventory increasing, custom home construction remains a strong option for buyers who want:
Personalized layouts and modern designs.
Energy-efficient features that lower utility costs.
More space in suburban or rural locations instead of high-density urban housing.
Material Costs & Supply Chain Updates
The cost of building materials is a key factor in the Richmond housing market:
Lumber prices have stabilized, benefiting builders and homebuyers.
Concrete and steel costs have risen slightly due to new tariffs.
Labor shortages continue to pose challenges, slowing construction timelines.
At Keel Custom Homes, we have streamlined our supply chain partnerships to keep costs manageable while maintaining high-quality craftsmanship.
Richmond’s Economy & Housing Demand
Richmond’s strong economy continues to drive housing demand.
Job growth in technology, healthcare, and finance is fueling housing needs.
Major employers like Capital One, VCU Health, and Amazon are expanding.
More people are relocating to Richmond, creating sustained demand for new housing.
Virginia’s job market remains resilient, and low unemployment rates in 2025 are expected to keep buyer confidence high.
Looking Ahead: Why Build with Keel Custom Homes?
At Keel Custom Homes, we specialize in building high-quality, energy-efficient homes that fit your lifestyle and budget.
Key Trends We’re Seeing for 2025
Increased demand for flexible floor plans and multi-generational living options.
More interest in custom homes with energy-efficient features.
A shift from high-density urban areas to suburban and rural properties.
Why Choose Keel Custom Homes?
Build on your lot with complete customization options.
Cutting-edge technology to streamline the homebuilding process.
3-year guarantee for confidence in your investment.
If you're considering building a custom home in Richmond, now is the time to start planning.
Final Thoughts
The Richmond housing market remains strong in 2025, with continued price growth, rising inventory, and stable-to-declining mortgage rates. While affordability challenges persist, custom home options offer a unique solution for buyers looking to invest in long-term value.
At Keel Custom Homes, we help you navigate market trends and design a home that meets your needs.
Ready to build your dream home? Contact Keel Custom Homes today!