There are signs that the Boston area’s heated housing market is cooling
Greater Boston is still a tough — and expensive — place to buy a house, but the years of prices galloping relentlessly upward may be nearing an end.
Data released Wednesday indicate that home prices in the region showed signs of leveling off in October, after a long run-up, with the volume of sales slowing even as the number of properties on the market increased.
The figures help to reinforce a trend in the making for several months, amid rising interest rates and record-high asking prices throughout much of the region. While there’s no sign that prices will fall any time soon, the days of manic bidding wars and lightning-quick deals may be over, or nearly so.
“We’ve seen a steady softening of sales since Labor Day,” said Marie Presti, a Newton real estate agent and president of the Greater Boston Association of Realtors. “The good news for home buyers is there is less competition when making an offer, more time to shop for homes, and more opportunity to get into a property following a recent influx of new listings coming onto the market.”
Figures from the trade group show the median sale price of a single-family home in Greater Boston in October climbed 7.1 percent from the same month last year, to $605,000. That was a record price for the month — which is typically the tail end of the home-buying season here — but was well below the pace of growth during the summer.
That’s one indication the market may be nearing its peak, Presti said.
Another sign? The asking price on more than one in five homes on the market in October was cut at least once, according to data from the real estate website Zillow. While that measure of the market traditionally spikes in October, last month saw the most price cuts in at least seven years.
In addition, homes are sitting on the market a little longer, said Ryan Wilson, owner of Wilson Group Keller Williams Realty in Newton, especially in suburbs farther from the core of the region (and its better-paying jobs).
“That starts to give buyers more leverage,” Wilson said. “We’re seeing it more in the higher end. Typically, that’s what you see first, and then it trickles down to more-affordable properties.”
Which is not to say it’s getting much cheaper, especially for first-time and cash-strapped buyers. The demand for lower-priced homes is still strong. And while the pace of price increases may be slowing, costs are still going up. Crucially, so are interest rates.
While loan rates are still low by historic standards, the average rate on a 30-year fixed-rate mortgage has climbed nearly a point in the past year to 4.8 percent, according to Freddie Mac. That’s enough to boost payments on a $500,000 mortgage by nearly $300 a month.
The combination of high prices and rising rates has dampened several formerly hot housing markets across the country.
Data released Tuesday by the S&P Case-Shiller Index showed year-over-year prices in 20 major US markets were flat or slowing for the seventh straight month in September. In Greater Boston, Case-Shiller data showed, prices have been essentially flat since June, once seasonal variations are taken into account.
At the same time, inventory, long scarce, is beginning to tick up.
The number of houses and condominiums listed for sale in Greater Boston was up 8.7 percent in October, compared with the same month last year, according to the GBAR. New listings in October were up about 20 percent.
“If that number continues to climb, our market will be even more balanced,” Presti said. “For now, it is still somewhat a seller’s market, but as these numbers reflect, supply is not as constrained as it was this past summer.”
The market has definitely settled down, said Geri Farrelly, owner of Farrelly Realty Group in North Reading. Her agents welcomed a wave of new listings this fall, which kept prices in check. Those houses sold quickly, she said, a sign the market is still healthy.
“Things aren’t moving up like they were. That was crazy,” she said. “It feels pretty stable right now, especially in my area.”
In the housing market, however, stability often is short-lived. It’s too soon to know if this lull is a blip, or the start of an extended slowdown, Wilson said.
“Things have to level off at some point, but we won’t know we’re on the way down until we already are,” he said. “It’s impossible to predict.”