Massachusetts home sales fell in January compared with a year ago, according to The Warren Group, a real estate analytics firm. And while prices rose year over year to new January highs, the typical single-family home sold for less than $500,000 for the first time since March 2021.
There were 3,509 single-family home sales across Massachusetts last month, an 8.9 percent drop from January 2021. But last year’s ferocious fall and winter market makes for challenging comparisons, and a drop was to be expected. Year-over-year sales numbers have been down for six straight months now, said Warren Group chief executive Tim Warren, and 2021 saw the busiest January for single-family home sales since 1999.
The sales slowdown is not for lack of home buyer interest, Warren added, but rather a lack of homes for sale. There were about half as many houses and condos on the market in January compared with a year ago, when inventory was already low, according to a separate report by the Massachusetts Association of Realtors.
The median price of a single-family home sold in January was $495,000, an all-time high for the month and a 10.7 percent increase over January 2021. “That’s a lot, but it’s not an astronomical increase,” Warren said. A slowdown in price growth is probably a good thing after two straight years of double-digit percentage gains in home prices, he added.
What’s more, it’s unlikely to last long.
“Typically the January and February median prices are among the lowest for the year, so we’ll be back over $500,000 soon,” Warren said.
“The legs on the market in places like Wellesley and Newton and Cambridge, there just may not be enough people remaining who can afford that level of price, and so there’s a flight to what I would call affordability,” Warren said, noting that the median price of a single-family in Worcester County rose 10.3 percent year over year, outpacing the more expensive counties that lay mostly inside Interstate 495, such as Suffolk, Middlesex, Norfolk, and Essex. (See county-by-county data here.)
Statewide price growth was also buoyed by vacation home buyers, who are still bidding up prices in Berkshire and Barnstable counties. While there were fewer single-family home sales on Cape Cod last month than in January 2021, the median price of a house in Barnstable County climbed 18.8 percent over a year ago, from $505,000 to $600,000.
Economists expect rising interest rates to put some downward pressure on home prices this year, as more expensive mortgages erode purchasing power. The average interest rate on a 30-year mortgage was 3.92 percent on February 17 — almost a full percentage point higher than in February 2021. That difference is enough to reduce a home buyer’s price range by tens of thousands of dollars.
But Warren worries that buyers will be in a rush to lock in a lower interest rate, creating something of a stampede in February and March and pushing up prices further in the near term. “People may be bidding too aggressively in the next couple of months, hoping that if they overpay by $10,000 in February, that’s the same monthly payment as what they would have gotten in October [with the higher rates],” Warren said.
The local condominium market mirrored that of single-family homes, with the median sale price of a Massachusetts condo up 9.5 percent in January, from $400,000 to $438,000 — a new high for the month. Sales volume also slid, down 14.9 percent, with 1,442 condo sales statewide. Condo sales held steady in Somerville in January, where the median sale price climbed 24.3 percent year over year, from $717,500 to $891,500. Prices in South Boston were flat, however, with sales down 61.4 percent from a year ago. (See town by town data here.)