Boston home buyers took advantage of price decreases in July and August
We hope the Summer has been great for you and you were able to take in a relaxing Labor Day weekend! Below is our August update and analysis.
Data representing single family, multifamily, and condos in Suffolk, Middlesex, and Norfolk counties from MLS.
August sales rebound
August sales data is in! It shows that buyer demand has continued to remain strong! While prices have slightly decreased and the days it took to sell a home slightly increased, the number of sales for August was fairly high given the continued low inventory buyers have had to choose from.
Let us explain further
August is usually a slower month for home buying. Homebuyers are generally vacationing, and Summer holidays take precedence. It was further expected that August would be slower than usual because of the continued interest rate increase, but in truth, August homes sold were only 11% lower than pre-pandemic 2019 levels! However, respectively, July was 30% lower.
Two things happened
First off, we believe expected July sales slipped into August. If you recall, there were lots of interest rate increase talks in June and July as inflation was uncontrolled. We believe many homebuyers decided to sit and wait it out to see what this could mean for them. In that time, interest rates did end up increasing roughly ½ a point.
Secondly, the point of interest rate increases is to bring the prices of goods and services down, which also applies to real estate prices. In July and August, we saw that the median average price of homes dropped by 201 and 269, respectively. While they did not drop immensely, we believe buyers decided to take advantage of what they could. This contributed to the upswing in sales in August.
What you should consider and expect in September
With homebuyers transitioning into the Fall, there is often competition in September as people come off the summer months. We expect that the price drops will continue at a similar pace. In parallel, however, we also expect another rate increase from the Federal Reserve based on the latest discussion and news. Homebuyers will want to consider how much exposure they have to interest rate increases vs. how price drops to combat the overall affordability of a home. Buyers can run simple scenarios with this mortgage calculator.
We believe the inventory of homes on sale will remain low overall. This is because many homeowners refinanced to very low interest rates in 2020 and 2021.
Given the uncertainty in the market and unofficial recession, we advise that if you are looking to buy in the current market, expect to hold onto your home for at least 5 years to allow for enough time for the market to play out.
Please reach out with any questions or comments! We would love to hear from you!
The Nuhom Team