
Fewer and fewer homes are being sold in New Hampshire and inventory begins to grow as home prices, uncertainty and high mortgage rates keep sellers and buyers out of the market.
November’s single-family real estate sales market remained significantly suppressed compared to 2021’s, continuing a trend seen in many months in the second half of this year.
Only 955 such homes were sold statewide last month according to The Warren Group, publisher of The Registry Review. That represented a 29.68 percent decrease over November 2021 and a 25.57 percent fall over November 2019, before the COVID-19 pandemic supercharged the nation’s demand for housing.
The median sale price for a single-family home last month was $415,000 statewide, The Warren Group said, an 8.64 percent year-over-year gain and 44.33 percent higher than November 2019.
Year-to-date, 11,454 single-family homes have been sold at a median price of $418,000. Those figures are 12.03 percent down and 11.47 percent up from the same month last year.
Leading indicators published by the New Hampshire Association of Realtors suggest that the state could be headed for a softer housing market come springtime, even as the number of pending sales fell 23 percent year-over-year to 959.
The state saw 20.2 percent more single-family homes for sale last month – 1,853 – compared to the same period last year, with the number of months’ supply rising 36.4 percent to 1.5 months. Days on market rose 7.7 percent to 28, while the average share of list price that sellers received dropped slightly to 99 percent, the second straight month where that figure was below 100 percent.
National Forecasts Discordant
Uncertainty over the national economy’s direction has created an unusually broad spread among this season’s forecasts for the nation’s housing market.
Economists at Zillow expect home values to remain “relatively flat” at the national level, while those at Freddie Mac expect a 0.2 percent drop in the nationwide median home-sale price and Fannie Mae’s analysts think a 1.5 percent drop is in the cards. The National Association of Realtors Chief Economist Lawrence Yun sees a similarly stable market, with prices dropping a mere 0.3 percent year-over-year and total sales of existing homes will slip by only 6.8 percent.
More pessimistic takes can reportedly be had from John Burns Real Estate Consulting (a 20 percent to 22 percent drop) and Wall Street firms like Moody’s Analytics (10 percent drop). Consultancy KPMG’s chief economist, Diane Swonk, recently wrote that she foresees a 20 percent drop in the CoreLogic Case-Shiller Home Price Index in the fourth quarter of 2023 over the fourth quarter of this year.
Optimistic takes can still be had, too: Realtor.com’s team thinks 2023 could see 5.4 percent home price growth on a year-over-year basis, and CoreLogic believes a 4.1 percent gain is possible.
The picture for numbers of sales – important for brokerage and agent cash flow after two years of easy profits – is clearer. Freddie Mac sees a roughly 12 percent decline nationwide while Realtor.com envisions a 14.1 percent slide; Fannie Mae sees a 17.7 percent drop-off and Redfin sees a 16 percent fall.
Interest Rates Called Key
The key, many observers say, is what happens with mortgage rates. John Burns Real Estate Consulting’s forecast, for example, is explicitly contingent on rates staying at or close to 6 percent next year.
Even if prices fall substantially, however, several prominent forecasters observing the nation’s housing sector don’t foresee another housing crisis like the one that followed the Great Recession.
Economists at brokerage and listings portal Redfin estimated in a recent study that only 3.4 percent of homes bought in the last two years would be underwater on their loans if home values fell 4 percent over the course of next year. If values fall 8 percent, only 6.3 percent will be underwater. And for the share of underwater pandemic homebuyers to hit breach 10 percent, home values would have to fall by 12 percent.
NAR’s Yun likewise has pushed back on predictions from some quarters of a housing crash on par with the 2008 financial crisis, citing the still-strong labor market, “virtually no” subprime loans on the market and a 3 million-unit shortfall in housing production between this housing market cycle and the last one that’s cut inventory on the market by around 75 percent.
Buyers near the start of their mortgage terms typically have little equity built up in their homes and pandemic-era buyers made their purchases as the housing market was rocketing upwards, potentially past a sustainable level for home values.
“Even with anticipated price declines, next year’s housing downturn won’t come anywhere close to the foreclosure crisis we saw during the Great Recession in most parts of the country,” Redfin Senior Economist Sheharyar Bokhari said in a statement issued along with the study. “Recent homebuyers have enough equity–both because they’re likely to have made relatively large down payments with a low rate and because values rose so much so fast–that most aren’t at risk of owing more than their house is worth. Even if a homeowner is at risk of falling behind on their mortgage payments next year–say they lose their job and inflation has claimed a big chunk of their savings–having equity means they could sell instead of face foreclosure. It’s also worth noting that not many Americans are expected to lose jobs next year, as even if the U.S. does enter a recession it’s expected to be mild.”