As prices continue to rise statewide, the number of home sales and signs of the red-hot market that’s plagued the state for two years are starting to fall.

Housing markets across the country may be slumping, and in New Hampshire’s busiest markets, indicators suggest demand is now as soft or softer than it was in 2019. 

The shift comes as yet another statewide home price record was set last month despite continually dropping sales totals. 

The year-to-date statewide median single-family sale price hit $400,000 in May over 3,871 sales, an all-time high for the median price and a 10 percent year-over-year drop in year-to-date home sales according to The Warren Group, publisher of The Registry Review. It’s also the slowest pace for home sales through May 31 of any year since the Great Recession. 

In May, alone, 1,072 single-family homes sold at a median price of $435,067. The sales total represents a 5.7 percent drop over May 2021, and a 29.7 percent drop over May 2019, when the monthly median single-family sale price was $285,000. 

Bidding wars are still evident in data reported by the New Hampshire Association of Realtors, with the average single-family home receiving 105.2 percent of its list price in May, compared to 104 percent in the same month last year. Among condos, that figure jumped from 102.8 percent to 104.1 percent over the same period. 

Southeast Sees Cooling 

Over the course of May, indicators emerged that suggest the state’s housing market is being rapidly cooled by rising interest rates.  

According to Freddie Mac, the average rate on a 30-year, fixed-price loan rose from 4.67 percent in the seven days ending March 31 to 5.3 percent for the seven days ending May 16 before jumping again to 5.78 percent for the seven days ending June 16. 

National Association of Realtors Chief Economist Lawrence Yun said in a statement following the Federal Reserve’s June interest-rate decision that that this year’s jumps in the average interest rate on a 30-year, fixed-rate home mortgage have sent the monthly payment on a hypothetical $300,000 loan up from 1,265 in December 2021 to $1,800 today. 

“That’s painful and, consequently, will shrink the buyer pool,” he said. “Home sales have recently been trending down towards 2019 figures. Sales could fall even further with some inventory sitting on the market for more than a month, like in the pre-pandemic days. Pricing a listed home properly will, therefore, be the key to attracting buyers. In the meantime, rental demand will strengthen along with rents. Only when consumer price inflation tops out and starts to fall will mortgage rates stabilize, or even decline a bit.” 

In Manchester, according to brokerage and listing portal Redfin, 3.5 percent of residential listings had price drops during the four weeks between May 2 and May 29, up from just 1.3 percent between Feb. 28 and March 27. For the four weeks ending June 12, the most recent data available, that figure kept spiking to 4.8 percent. It’s now above the 4.3 percent of listings that had price drops during the comparable period in 2019. 

In Rockingham County, the other area of New Hampshire that Redfin reports data on with enough listings for meaningful statistical analysis, the share of residential listings with price drops also soared starting in March. From a low of 1.4 percent of all listings for the four weeks between Marcy 14 and April 10, the share of listings with price drops hit 3.5 percent for the four weeks ending June 12. That’s the same as the share seen in the comparable period in 2019.  

Price drops are typically a sign that a seller has overpriced their home relative to buyer demand, and before the pandemic would usually rise throughout the year as homes unsold during the spring market sought to attract new buyers during the less-intense fall market. Generally, the higher the share of homes with price drops, the lower the buyer demand in a market. 

Sales Slow, Bidding Wars Continue 

The share of listings that have gone under agreement within two weeks of listing has also collapsed in each region, according to Redfin data.  

In the Manchester area, after hitting 80.5 percent for the four weeks ending April 17, it dropped dramatically to a mere 25.7 percent for the four weeks ending June 12, far below the 62.3 percent seen for the four weeks ending June 13, 2021 and the 37.4 percent seen in the four weeks ending June 9, 2019. 

In Rockingham County, the drop was similarly steep: From a high of 71.5 percent for the four weeks ending April 24 to 31.3 percent for the four weeks ending June 12. That compares to the 57.2 percent of listings that went off-market in the four weeks before June 13, 2021 and the 39.6 percent that did so in the leadup to June 9, 2019. 

May data reported by the New Hampshire Association of Realtors shows these trends did not appear to have a strong impact on inventory by the close of the month, however. The total number of single-family homes for sale was actually down 9.7 percent year-over-year, to 1,589, while the number of condominiums for sale was off 16.9 percent on the same basis, to 370. Months single-family supply rose from 1.1 to 1.2 year-over-year, while the figure for condos stayed level at 0.9. 

Nationwide, 60.8 percent of the home offers written by Redfin agents faced competition in May, the company said earlier this month. That figure is down from 67.8 percent in April of this year and 71.8 percent in May 2021. The shift came as mortgage rates jumped to levels not seen in over a decade, trimming buyers’ budgets dramatically and knocking some out of the market altogether. 

“The [national] housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” Redfin deputy chief economist Taylor Marr said in a statement accompanying the multiple-offer data. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out. While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one.”