Lower mortgage rates and more inventory boosted January home sales in Boston and are luring more buyers back into the market, according to the Greater Boston Association of Realtors (GBAR) January housing report.

Following two years of market instability, the report found early indications that 2024 may be a brighter one.

In January, single-family listings rose from last year, the first increase in 20 months. Single-family home sales also rose annually and month over month. Declining mortgage rates and an increase in listings also brought more buyers back to the market last month, the report found. 

January single-family home sales grew 1.4%, year over year, with 519 homes sold, compared to 512 homes sold in January 2023, marking the first annual increase for single-family home sales since May of 2022. Month-over-month home sales did slow, falling 24.6% from December, not uncommon, the report found, as fewer buyers are shopping during the holiday season and into the winter. 

Condominium sales declined last month, falling 27.3% from a year earlier, with 411 units sold, compared to 596 in December, marking the slowest January condo sales in 15 years. 

GBAR president Jared Wilk, a broker with Compass in Wellesley, said buyers have been slowly returning to the market since mortgage rates started to drop in mid-November, and demand has grown increasingly stronger in the last month and a half with the holidays over and rates now under 7%.

“Inventory is still tight, which has limited overall sales volume, but listings are up about 20% since the start of the year and that’s providing buyers a larger selection of properties to choose from and more room for negotiation on price, which has made the market much more attractive,” he said. 

Despite rising buyer interest and more available inventory, median selling prices are showing little signs of weakening. 

January’s median single-family home price set a new record for the month, up 16.2% to $820,00 from January 2023’s $705,500, reflecting the largest percentage gain in single-family median sales prices since the 17.5% increase between February 2021 and February 2022. 

Single-family home sale prices in January also increased month over month, up 2.8% from December. Condo prices, however, remained mostly unchanged, falling 0.7% year over year and falling 1.4% from December. 

“Buyers have more purchasing power now, compared to this past fall, and with mortgage rates back to within a half point of where they were at this time last year, they’re more confident and better positioned to make a full price offer,” Wilk said. “In addition, listings remain limited, which increases the likelihood for competitive bids and keeps upward pressure on prices.”

Last month, the majority of properties sold at nearly their full asking price. Single-family homes typically sold for 98.3% of their original list price, while condominiums garnered 98% of their initial sales price.

Spring market advice

Despite favorable market conditions for spring sellers, Wilk advises homeowners to exercise caution and avoid overly aggressive property pricing.

“In today’s low inventory market the temptation to ask top dollar can be strong, but we find that those who overprice their property run the risk of making it harder to sell since the pool of buyers is often smaller and may require one or more price adjustments,” Wilk said. “The homes that are going under agreement quickest are those that are updated, well-maintained and priced fairly to similar properties either currently or recently on the market, but others tend to sit longer, require seller concessions or sell below their original asking price.

Wilk said pricing will be even more critical over the next few months with the growth in new listings and anticipated improvement in inventory through the spring. 

Home listings explode

January single-family home listings rose 134% to 682 homes listed, compared to 291 in December. Condo listings also improved, increasing 193% to 925 homes listed, compared to 315 in December. 

There was also significant growth in active listings. Active single-family home listings rose 21% from December, while active condo listings grew 20%. 

“We’ve seen a steady increase in foot traffic at open houses since the beginning of the year, which bodes well for the upcoming spring market,” Wilk said. “The level of buyer interest is the strongest we’ve seen in at least six months, with the majority of those currently in the market much more serious and intent on buying than those who were shopping for a home this past summer and fall. What we need now is an influx of listings to meet the demand.”