The COVID-19 pandemic has sent home prices soaring across New Hampshire as demand exploded, inventory shrank and time-on-market dropped below one month in many markets.
But a new study by First American has found that the state’s price jumps in October were the second worst in the nation on a year-over-year basis.
The statewide median single-family home sale price in October jumped 21.43 percent, to $340,000. The median condominium sale price rose 11.63 percent, to $240,000.
New Hampshire as a whole came in fourth in First American’s rankings of states with worsening affordability year-over-year. The company’s Real House Price Index for the state dropped 7.6 percent, tying it for second-worst drop with Massachusetts, whose economy has boomed in recent years but whose restrictive zoning laws make it difficult to produce housing, and geographically constrained Hawaii. California saw the worst decrease in affordability in First American’s data, with its Real House Price Index falling 9 percent.
The Real House Price Index measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the index adjusts for house-buying power, it also serves as a measure of housing affordability.
“The [national] housing market prior to the pandemic could have been characterized as a sellers’ market, with a shortage of supply relative to demand. With the current supply of homes for sale even tighter relative to demand, it can only be characterized as a super-sellers’ market today. The pandemic has intensified a sense of home as refuge and falling mortgage rates have made financing a home purchase historically inexpensive,” First American Chief Economist Mark Fleming said in a statement. “As a result, demand for homes has surged while the supply of homes for sale has fallen to near record lows, resulting in rapid house price appreciation. Nominal house price appreciation was 7.9 percent higher in October than in March of this year, a precipitous rise in just seven months that has pushed back against the 10.7 percent increase in house-buying power over the same period.”
Not all communities saw decreases in their affordability on a year-over-year basis. Cleveland and Pittsburgh both saw their Real House Price Index figures grow by 4.8 percent and 4 percent respectively, with Kansas City, Missouri (2 percent growth), New Orleans (1.8 percent growth) and Nashville, Tennessee (0.8 percent growth) rounding out the top five.
“In 2021, mortgage rates are anticipated to remain near historic lows and the economy should improve as vaccinations become more widespread. Both of these conditions will keep house-buying power strong in 2021,” Fleming said. “Yet, housing supply constraints will likely remain and continue to fuel a sellers’ market. The question is, will robust house-buying power be enough to offset strong nominal house price appreciation, or will the trend of declining affordability continue?”
