As mortgage rates increase will Boston condo prices fall?

That cooler-than-normal start was the result of limited housing supply and the rising mortgage rates from prior months that had some putting their home buying search on hold and causing sellers to stay put. 

In April, single-family home sales fell 25.9% year over year, with 667 homes sold, compared to 900 homes sold in April 2022. While sales had a month-over-month increase of 5.9% from March, it was the slowest April for single-family home sales since 2009.

Condominium sales performed similarly last month, with a 33% decline from a year earlier, with 697 condos sold compared to 1,041 in April 2022, marking the month’s lowest sales since 2015. 

“The market has been rather uneven so far this spring, with buyer activity rising and falling from week to week based on the timing of new listings coming to market, fluctuations in mortgage rates and even the weather,” said GBAR president Alison Socha, an agent with Leading Edge Real Estate in Melrose. “The biggest challenges remain the lack of inventory and the reluctance of homeowners to sell and give up their low-interest mortgage. However, after the frenzy of the last few springs, today’s slower sales pace provides the feel of a more normal market, and that’s enabled buyers the time to proceed more cautiously while causing sellers to consider certain concessions during this period.”

Listings are at a premium, and it’s definitely affecting the market. 

Selling prices have eased over the past year, the report found, as a result of a more “relaxed sales pace and higher mortgage rates limiting how much house buyers can afford.”

Socha says with listings at a premium, GBAR is seeing healthy competition at all price points, but with both the buyer pool and purchasing power decreasing from last year, there is upward pressure on prices. 

“Buyers still outnumber listings in many communities so multiple offers remain quite common, but bidding wars are much more rare,” she said. “Sellers also have become increasingly more conservative on price when listing their home for sale. As a result, we’re not seeing a rapid run-up in prices at the moment, though they remain not far from their peak.”  

The median selling price of a single-family home fell 3% from a year earlier, falling to $820,000 from $845,000. It also slid 0.6% from a month earlier, when the median home sale price was $825,000, and was down from its June 2022 peak of $899,950.

The median selling price for condominiums also fell last month, dropping 0.7% from $715,000 a year earlier, but rose 4.4% from $680,000 in March. Despite the increase, the median sales price is still 1% below April 2002’s record high of $717,000.

GBAR cites limited home and condo supply for keeping home prices high. 

There was only a two to two-and-a-half-month supply of homes for sale entering May, which mirrors inventory from a year ago but is still not enough to satisfy demand.

Active listings of single-family homes in April fell 4.4% from 1,333 last year to 1,275 last month. Condo listings were also down, falling 1.7% from 1,786 last April to 1,755 last month. Single-family home listings are down 4.4% from last year and condo sales are down 1.7%. 

“For those thinking about selling, market conditions are favorable for doing so this spring,” Socha asserted. “Many buyers who left the market last fall when mortgage rates hit 7% have returned and, with inventory still in short supply and equity values close to their record level of last spring, it’s an opportune time to be listing a home for sale.”

The report also found that since the end of last year, time on market continues to steadily decrease with single-family homes listed for a median of 15 days in April, compared to 34 in December, and condominiums staying on for 17 days, compared to 41 days in December. 

The sold-to-list price ratio also improved in April for the second month in a row, according to the report, which found the typical single-family home sold for 103.2% of its asking price, up from 100.3% in March. Condominiums fared similarly, selling for 99.9% of the original asking price last month, compared to 98.9% in March.