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Falls Church City appeared to buck the regional housing trend in December 2024, recording a 44 percent year-over-year decline in home sales while nearly every surrounding jurisdiction posted gains.

But two local real estate agents say the dramatic percentage does not signal collapsing demand. Instead, it reflects the city’s tiny housing market, scarce inventory, off-market deals and homeowners reluctant to surrender historically low mortgage rates.

Regional home sales increased 26 percent from December 2023 to December 2024, according to Bright MLS figures. Fairfax County sales rose 35 percent, while Loudoun and Montgomery counties each gained 28 percent. Sales in Washington increased 20 percent.

The momentum came despite mortgage rates remaining in the high 6 percent range. Rates were still about three-quarters of a percentage point below their level a year earlier, while the regional median home price climbed 6 percent to just under $600,000.

Falls Church City alone registered a steep decline.

A Few Sales Can Swing the Numbers

Real estate agent Kelly Millspaugh Thompson said percentages can be misleading in a jurisdiction covering only about 2.2 square miles.

With just five sales in one month, a year-over-year difference of three or four transactions could produce a decline approaching 44 percent. Larger neighboring jurisdictions, by contrast, have thousands more homes contributing to their statistics.

Some Falls Church transactions also may never appear in MLS data. Thompson said older houses are sometimes sold privately to developers, who tear them down and construct new homes. Even a handful of those off-market purchases could significantly change the city’s reported results.

Lisa DuBois, an associate broker beginning her 20th year in local real estate, agreed that the city’s small geography and limited inventory make percentage changes look more dramatic than the underlying transaction totals.

Differences in housing stock may also affect comparisons. DuBois said condominium sales could help explain why Arlington’s December figures were much stronger than those in Falls Church City.

Seasonality adds another complication. Both agents noted that relatively few homeowners list or sell properties in December.

Low Mortgage Rates Keep Owners in Place

The larger obstacle is the shortage of owners willing to sell.

Many bought or refinanced when mortgage rates were 3 percent or lower. Trading that loan for a much more expensive property at a rate near 7 percent can produce a drastic increase in monthly payments.

Thompson offered the example of an owner who bought a $750,000 house five years earlier with a 2 percent mortgage but would now need to purchase a $1.5 million home. If the family wants to remain in the same school district, staying put and expanding the existing house may make more financial sense.

DuBois called that interest-rate lock-in the biggest factor limiting sales. She said 2024 brought an exceptionally low number of transactions as potential sellers waited for borrowing costs to fall.

That reluctance cannot last forever for every household. Growing families, divorces, deaths and other life changes will eventually compel some owners to move, DuBois said.

The agents differed over whether a presidential transition meaningfully influences the market. Thompson said sellers often become more cautious during a change in administrations. DuBois said those transitions have little effect on home sales and are more likely to influence the rental market.

Demand Remains Intense

Despite the reported decline, Thompson described the Falls Church City market as “extremely competitive.” Properties often sell during their first weekend on the market, she said, if they are not purchased privately before being listed.

The challenge for buyers is gaining entry. Homes in the city generally command more than comparable properties in the Falls Church portion of Fairfax County, with the city’s school system contributing to the premium.

New development, including Broad & Washington, is adding residences as Falls Church expands its restaurants, amenities and walkable destinations. Thompson said the city’s evolution has accelerated after years in which nearby Clarendon and Ballston seemed to develop more quickly.

DuBois said Falls Church attracts a broad range of buyers. Families value its schools, while downsizers are drawn to its walkability. Demand stretches from first-time purchasers to retirees.

That appeal helps explain the apparent contradiction in the December data: Falls Church recorded fewer sales not because buyers disappeared, but because so few owners were willing—or financially able—to leave.