The spring housing market is in full swing. Good luck.
New figures out this week show, again, just how hard it is to buy a house in Greater Boston these days, as tight supply and strong demand combine to drive prices ever higher, despite interest rates that are now rising fast, too.
The median price for a single-family home in Greater Boston hit $789,500 in March, according to the Greater Boston Association of Realtors, up 9.4 percent from the same month last year. Condominium prices climbed at the same pace, to $675,000, the highest median price GBAR has ever recorded.
This comes as the number of sales continues to dwindle, a function of shallow inventory and a sense — among some prospective buyers, anyway — that homes have simply gotten too expensive and it’s better to wait until there are more options. Single-family home sales fell 7.9 percent compared with last March, while condo sales dropped 21 percent.
“Some buyers have been intentionally sitting out the market until inventory improves after getting frustrated on losing out on other properties they made offers on, while others have been forced to the sidelines due to rising mortgage rates and higher home values,” said GBAR President Melvin Vieira, Jr., an agent at RE/MAX Destiny in Cambridge. “That’s certainly taken some momentum out of the market.”
And there aren’t many signs that the situation will soon change. Active listings are down — in what is typically the busiest time of year for home sales in Greater Boston — and new listings were down in March for single-family homes, though up for condos. Some would-be sellers remain on the sidelines, Vieira said, because they don’t see anything they can buy and move to if they were to sell.
“When that occurs, trade-up activity slows and the entry-level market stalls,” Vieira said. “We’re also building fewer and fewer homes each year.”
Then there are interest rates.
Nationally, the average rate on a 30-year-fixed rate mortgage has climbed from 3.1 percent at the end of December to 5 percent last week, according to Freddie Mac. For a buyer putting 20 percent down on a $750,000 house, that amounts to an additional $658 per month in payments on a 30-year mortgage, according to Bankrate’s mortgage calculator.
While some economists predict that rising rates will cool off home prices, there’s little sign yet that it’s happening in the Boston area. The typical single-family home in March sold for 6 percent above asking price, according to GBAR’s data, and multiple-offer bidding wars remain common as buyers with resources continue to scoop up what they can.
If anything, Vieira notes, buyers are accelerating their home purchases now to get ahead of rates that are expected to climb even more in the months to come. Put another way, if you think it’s tough to buy this spring, just wait until you see summer.