The Boston-area housing market has held up well under the weight of rising mortgage rates and some of the most unaffordable prices in the country.
That may be about to change.
In overheated cities such Denver, Nashville, and Seattle the number of homes on the market is starting to climb, price growth is easing, and sales are slowing. Across the country, a growing number of buyers are backing out of sales contracts. The days when sellers could count on multiple offers above asking price may soon be over.
“Those who are still able to purchase a home are experiencing less competition for listings, giving them more options to choose from and more time to evaluate and decide,” said Nicole Bachaud, an economist at real estate website Zillow. “Sellers are finally being challenged on prices, resulting in higher shares of listings with a price cut and decelerating growth in list prices.”
In Greater Boston, the data tell a somewhat different story, at least for now.
The inventory of homes for sale here shrank by 19 percent in June from a year earlier, according to the most recent Zillow data. In Seattle and Denver, they expanded by 5.5 percent and 9.6 percent, respectively, an early indicator of waning buyer demand as homes sit longer on the market.
Another early warning signal — the percentage of listings with a price cut — are rising in booming markets but have shown only a slight uptick here.
And as mortgage rates have nearly doubled since the start of the year, a growing number of sales are being cancelled as buyers rethink their ability to cover steeper monthly payments.
The cancellation rate hit 15 percent nationally in June, according to real estate firm Redfin. Las Vegas topped Redfin’s list at 27 percent. Boston clocked in at under 10 percent, even as Zillow says the average monthly mortgage payment here soared 54 percent over last June.
But the Boston market can buck the broader trends for only so long, real estate analysts say. That seems true when we look at the June data compared with the preceding month.
Inventories here rose 6.8 percent from May to June, not too far from the US average of 10 percent, according to Zillow. New listings in the Boston area rose 7.2 percent, just a shade less than the national rate.
“Every market is so different, but they are all moving in the same general direction,” said Bill McBride, a highly regarded real estate blogger who writes the CalculatedRisk newsletter on Substack.
Boston’s fundamentals will inevitably weaken, he predicted, but probably not to the same degree as places like Austin or Portland.
We talk endlessly about the region’s super-tight and expensive housing market — and housing here is painfully expensive — but ever since home values bottomed out in early 2012, the most torrid action has been elsewhere.
From February 2012 through April of this year, home resale values in metro Boston increased at a 7.6 percent annual rate, compared with the US average of 8.3 percent, according to S&P Case-Shiller indexes. In Dallas, the gain was 10 percent a year, while in Miami values rose 10.5 percent and Seattle climbed 12 percent.
Using its own valuation models, Zillow ranks Boston 37 out of the 50 largest metro areas by growth in home prices over the past year.
Boston’s (relative) moderation on the way up over the last decade may mean a more moderate slowdown.
The local market will also benefit (again on a relative basis) from the region’s continued allure to young, well-educated, and high-earning workers. Our progressive social policies may attract homebuyers who are now thinking twice about fast-growing but conservative states such as Florida and Texas.
And Massachusetts’ long-term problems of too little new construction and too many restrictive zoning regulations show no signs of being solved.
While these trends are good news for homeowners, they are bad news for anyone trying to get into the market. A buyer paying the median price ($660,000) for home in Greater Boston needs to earn more than $181,000 a year, nearly twice the region’s median household income, according to a recent study by Harvard University’s Joint Center for Housing Studies.
Most analysts are forecasting a slowing of the appreciation in home values, not falling prices. Zillow sees values rising 8 percent nationally (5.6 percent in Boston) over the next year.
“That is a far cry from recent highs above 20 percent annual growth, but still very fast historically,” said Bachaud, the Zillow economist.
McBride, the blogger, sees similarities in today’s market with the period of 1978 through 1982. Prices had been accelerating quickly, inflation was running hot and the Federal Reserve was jacking up interest rates, and demographic trends meant demand was strong. Back then, prices adjusted for inflation declined 11 percent over three years nationwide, but the market’s decline was much milder than the housing collapse of the late 2000s.
“We are finishing a boom and headed into a bust,” McBride said. “How bad a bust we don’t know.”
We fared better than the rest of the country when the housing bubble burst in 2007. Absent a full-blown recession in the next year or two, Boston should be OK.
Larry Edelman can be reached at email@example.com. Follow him on Twitter @GlobeNewsEd.