The cooldown continues.
New figures out this week from the Greater Boston Association of Realtors indicate that an uncertain economy, widespread inflation, and rising interest rates are pushing both prospective buyers and sellers from the housing market in increasing numbers.
Single-family home sales in the region fell 16.3 percent year-over-year in October to 886, according to GBAR, the lowest count for the month since 2011 and the fifth straight month of declining home sales. Condominium sales dropped even faster. The 742 sold in October represent a 22 percent year-over-year decrease.
To be sure, home sales nearly always trend lower in the fall, a natural turn in the cycles of the region’s housing market. But this year’s decline is more than a seasonal dip, said GBAR President Melvin A. Vieira, Jr., an agent at RE/MAX Destiny in Boston.
“We’re accustomed to a slower sales pace in the fall, but this year the combination of rising mortgage rates, uncertainty over the economy and mid-term elections, and a lack of new listings to choose from has exacerbated the seasonal slowdown,” Vieira, Jr. said in a statement. “Not only is the pool of buyers smaller, but purchasing power has declined as well, and that’s taken a lot of steam out of the market in recent months.”
That’s not making it any easier for buyers, though. Home prices, while down since peaking earlier this year, are still high. In fact, last month’s median sales price of $747,000 for a single-family home was the highest ever recorded in October, according to GBAR, and up 6.7 percent compared to the same time in 2021.
Couple those high prices with steadily increasing mortgage rates, and its easy to understand why fewer prospective buyers want to go through with a purchase. The national average rate on a 30-year-fixed rate mortgage currently sits at 7.08 percent, more than double what it was this time last year, according to Freddie Mac. That means a buyer’s monthly payment on the median-priced house in Greater Boston would be about $1,500 more today than what they’d pay on the same-priced house purchased a year ago.
But it’s not just bad news for buyers anymore. Our current economic cocktail has sellers pumping the brakes too. That’s evidenced by the nearly 25 percent month-over-month decrease in new listings that was recorded in October.
“The market has shifted,” said Vieira, Jr. “Properties are no longer being bid up thousands of dollars over asking price, and sellers no longer have the luxury of dictating price and terms. Instead, homes must be well-maintained, fairly priced to the competition, and in a good location to command top dollar. Those that get too aggressive run the risk of price reductions and other concessions, as well as watching their home take longer to sell than desired.”
The bottom line: It’s a tough time for just about anyone to move homes.