The Boston real estate market continued its downshift as it ended 2023 as shrinking inventory limited homebuyer opportunities and pushed prices higher, according to the Greater Boston Association of Realtors (GBAR) December housing report.

December home and condo listings reached a two-year low falling 20-25% from 2022, while median selling prices rose both year over year and month over month. Add in mortgage rates above 7% for most of the fall, GBAR found buyers and sellers taking a big step back from the market waiting for things to improve. 

December single-family home sales fell 24.6%, year over year, with 682 homes sold, compared to 905 homes sold in December 2022, marking the slowest December for single-family home sales in more than 25 years. Month-over-month home sales also declined, falling 14.3% from November. November also marked the 18th month in a row that single-family home sales fell on an annual basis.

Condominium sales also declined, falling 19.5% from a year earlier, with 582 units sold, compared to 723 in December, marking the slowest December for condo sales since 2008. Month-over-month condo sales fell 10%. 

GBAR president Jared Wilk, a broker with Compass in Wellesley said the market lost a lot of its luster when mortgage rates topped 7% over the summer “and that’s led to a steady decline in  sales and listings in recent months, which meant there was little to buy or sell in December.” 

“Many buyers were forced to sit on the sidelines this fall due to affordability issues,” Wilk said. “We’ve also seen plenty of owners opt against selling their homes in order to avoid taking on a higher interest rate loan, while others have let their listing expire until buyer demand improves. All of this has curbed activity,” 

For the second year in a row, single-family home sales declined year over year in 2023 due to fewer buyers and inventory. Overall, Greater Boston home sales fell 22.4% year over year, with 9,698 homes sold, compared to 12,498 in 2022, marking the lowest sales since 1996. 

On an annual basis, condo sales fared the same, falling for the second year in a row and the sixth time in seven years. Condo sales fell 19.1% with 8,835 condos sold compared to 10,925 in 2022, the lowest total sold since 2011. 

Wilk said the decline in sales reflects the loss of purchasing power buyers have experienced and the urgent need for more housing. 

“There’s still plenty of pent-up demand, but with listings extremely limited and buyers unable or unwilling to overextend themselves financially the market has been severely stymied in the past year,” he said. 

Home prices remain strong

Despite cooling sales activity, home prices remain strong. December set new records for home prices as the median home price of a single-family home rose 8.1% year over year to $800,000 and up 0.3% from November’s $797,250.

Condo prices increased even more. They climbed 14% year over year to $697,000 and rose 2.7% from November’s $679,000.

Last year was the 14th year in a row the annual median selling prices of both homes and condos grew, setting a new annual record high for Greater Boston

In 2023, the single-family home median rose 5.6% to $845,000 from $800,500 in 2022, while the median condo sales price rose 6.1% to $700.000 from $660,000 in 2022. 

“There might be fewer buyers in the market now than in recent years, but they still far outnumber the inventory of listings for sale, and this imbalance is allowing the price growth to continue to the benefit of home sellers,” Wilk said.

Waning inventory has allowed sellers to get their average price and the average sold-to-list price ratio was 99.3% for single-family homes in December and 101.7% for 2023. For condos, it was 97.% of their asking price in December and 99.8% for 2023. 

There was a steady decline in residential listings during the last four months of 2023 and in December they fell to a two-year low. 

December single-family home listings fell 14.5% to 724 homes listed, compared to 847 in December of 2022 and down 38% from November. Condo listings also dropped, falling 4.4% to 1,091 homes listed, compared to 1,141 a year earlier and down 32.3% from November, marking the fewest listings since January 2022. 

Wilk says the lack of inventory remains Greater Boston’s biggest issue, while noting that as mortgage rates begin to ease, buyers have started to return to the market. 

“However, as rates drop, we’re hopeful that sellers who opted out of the market late last year will re-list, and along with the seasonal influx in listings we see as spring approaches will help to boost activity,” he said.