A big increase in the median price of closed single-family home sales reflected a tight inventory picture as the summer wound down. But forward-looking indicators suggest a softening market lies ahead.
The number of closed single-family sales statewide was lower than October since at least 2012, when the Great Recession ended. But inventory figures contained a potential hopeful signal.
Only 1,137 single-family homes sold in October, a 15.02 percent drop over last October, according to The Warren Group, publisher of The Registry Review and a 29.77 percent drop over October 2019. The condominium market fared significantly better: 356 sales, or a 4.4 percent increase on the same basis – albeit 31.8 percent down from October 2019.
The median single-family sale price rose 12.16 percent year-over-year to $415,000, while the median condo price jumped 20 percent to $330,000. The increase in the single-family price is the second-largest year-over-year jump seen in the last 10 years, after only the jump from October 2019 to October 2020.
Still, the New Hampshire Association of Realtors reported that the average single-family seller on the state’s multiple-listings service only received 99.7 percent of their original list price last month, the first month the figure had dipped below 100 percent since the early days of the pandemic home sales boom. The average condo seller received 101.1 percent of their list price.
Forward-looking indicators contained a ray of hope for buyers, however. Inventory of single-family homes for sale in October, whose sales will likely close in November or December, jumped 10.2 percent year-over-year to 2,102. The increase came even as the number of new listings dropped 5.5 percent over the same period to 1,337. Pending single-family sales were down 20.5 percent to 1,243, NHAR reported.
The combination of falling pending sales, falling new listings and rising inventory are consistent with a rapidly cooling market thanks to the steady erosion of buyer power. If inventory builds up, it could reverse the declines in affordability seen over the course of the pandemic.
“[M]any homeowners are waiting until market conditions improve to sell their home, while other sellers are increasingly cutting prices and offering concessions to attract a greater number of buyers,” NHAR reported in its monthly report on the state’s housing market.
A reminder of how much mortgage-rate volatility has contributed to the erosion of affordability came the week before Thanksgiving, when the average 30-year U.S. mortgage rate tumbled by nearly a half-point according to mortgage-buyer Freddie Mac, from 7.08 percent for the week ending Nov. 10 to 6.61 percent for the seven days ending Nov. 17. It was the largest weekly drop since 1981.
This drop in average mortgage rates means the national median monthly mortgage payment nationwide is now $2,430, down from $2,542 from the week before, according to brokerage and listings portal Redfin.
According to Redfin’s calculations, the drop in interest rates could add between $10,000 and $20,000 to the final home sale price a buyer could afford, depending on the down payment.
“The historic drop in mortgage rates is a tick in the ‘good news’ box for the housing market, as lower rates deliver an immediate win for prospective buyers’ pocketbooks,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “Until we see more consistent evidence over time of slowing inflation and a bigger, steadier decline in mortgage rates, we expect the impact to be muted. Pending sales and new listings may stop declining, but they aren’t likely to see a major boost until there’s more certainty that the [Federal Reserve’s] efforts to curb inflation are working.”
The Fed’s interest-rate setting committee wraps up its next meeting Dec. 14.
