Dec 5, 2022 - Real Estate

Interest rates cool down Boston's hot housing market

Illustration of a key separating green and gold colored blocks, with elements of ballots in the background.

Illustration: Brendan Lynch/Axios

The tight housing market is beginning to slacken, if only slightly.

Driving the news: Realtor RE/MAX's October report showed 30.7% fewer closings around the country than in the same time period in 2021, with 36.8% more homes on the market.

  • The average home took 35 days to sell, nearly a week longer than last year.
  • Every month of 2022 has seen fewer home sales than in 2021, according to RE/MAX.

Zoom in: Data from the Massachusetts Association of Realtors shows the Boston area going along with the national trend.

  • The median sale price of a single-family home in Massachusetts dropped over 4% to $547,000 in October compared to September.
  • New listings are down nearly 19% in Massachusetts, and closed sales went down nearly 18% for single-family homes since September.

Why it matters: A cooling housing market means consumers have more choice and can explore multiple homes instead of being rushed to close on one of a few available ones.

  • Higher interest rates are partly responsible for the softening market.

What they're saying: "The historic pace and magnitude of interest rate increases have created a reset and softened the housing landscape as intended," said RE/MAX president Nick Bailey in a statement accompanying the report.

  • Bailey said most buyers are more concerned with affording a down payment and a monthly mortgage than they are with climbing interest rates.

The big picture: The state's lack of housing inventory is what causes sky-high prices and is still the most daunting problem for those looking to buy their first home.

With a few exceptions, Boston home prices trend down

The average sale price for a home in greater Boston is trending downward, but lower costs aren't uniform across the area, according to data provided to Axios from Zillow.

  • Peabody has seen the area's biggest dip in home prices with a 2.4% decline.
  • North Reading prices were down 2.2%.
Data: Zillow; Map: Erin Davis/Axios Visuals

Yes, but: Some areas bucked the trend.

  • Homes in Needham jumped up 3.1% while neighboring towns like Dover and Wellesley saw increases over 1%.
  • Crossing the state line into New Hampshire, prices continued to climb. Newton, N.H., saw prices increase 2.1% while Durham was up 3.8%.
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