Boston area home sales dropped in June to the lowest level for the month in four years.
The drop came as rising mortgage rates and spring home value gains reduced purchasing power, leveling fewer options for homebuyers, according to the Greater Boston Association of Realtors® (GBAR) June housing report.
Despite rising rates and values, there are still more buyers than there are listings, helping elevate last month’s median selling price for single-family homes and condos to a new record.
June single-family home sales fell 9.4% year over year with 1,208 homes sold, compared to 1,334 homes sold in June 2023, reflecting the lowest single-family home sales volume for the month since the pandemic, according to GBAR. Sales did improve month over month, up 19.4% from May.
Condo sales also took a dip last month, falling 14.1% with 944 units sold compared to 1,099 last June, marking the fewest condo sales in the month of June since 2020. Month-over-month condo sales improved 1.4% from May.
Jared Wilk, GBAR president and a broker with COMPASS in Wellesley, said with mortgage rates and home prices continuing to climb higher, and listings still at a premium in many communities, it’s becoming increasingly more challenging to purchase a home right now.
“Buyers have become more cautious and have shown less urgency to make offers in the last couple of months, with many having to modify or pause their home search due to affordability concerns, and that’s resulted in less foot traffic and fewer showings and sales since the Memorial Day weekend,” Wilk said.
Even though sales slowed last month, buyer demand continues to outpace inventory, and that’s driving up median sale prices.
June’s median single-family home price set a new record for the month, appreciating 7.7% to $961,250 from June 2023’s $892,188. It was the 12th month in a row the median single-family home price grew year over year. Month over month, the June median home price also grew, up 1.2%.
The median condo selling price last month remained stable from last year, but still set a new record for the month rising 0.7% to $750,000. Month-over-month condo prices grew, up 4.9% from May.
“Notably, last month is the first time since March the median sales price of condos has increased on an annual basis, as upward price pressure has been less extreme in the condo market where inventory has been more plentiful and demand softer due to the impact of higher interest rates on entry-level buyers,” the report noted.
Wilk said even though sales activity has weakened some, demand remains strong, with buyers far outnumbering property listings, and that imbalance is what continues to put upward pressure on selling prices.
“The lack of inventory is most pronounced in the single-family home market where listings remain at less than a two-month supply, which is why many buyers, including those looking to purchase condos, are being forced to pay top dollar in this market,” he said.
Last month, the majority of properties sold at or above their full asking price. Single-family homes typically sold for 104.1% of their original list price, while condominiums garnered 100.4% of their initial sale price.
Despite sellers having the upper hand, Wilk cautioned homeowners against overpricing their homes because it could shrink the pool of potential buyers.
“In today’s high interest rate environment, many buyers are unable or unwilling to overextend themselves financially,” Wilk said. “They’re choosing to be less aggressive and more conscientious, which has caused some to suspend their home search for the summer or until rates come down, and that’s made for a less competitive market than we saw this spring.
“We’re not only seeing more bids under asking price, but properties that are overpriced are drawing fewer offers, sitting longer and requiring a price reduction or two in order to sell.”
Despite limited inventory, the number of homes and condos for sale in June continued to rise from last year.
Active single-family home listings increased in June, rising 28% year over year, while active condo listings rose 17%.
“It’s still a seller’s market, but with mortgage rates stuck near 7 percent, home prices at record levels and more properties available for sale, buyers are going to have more of a say in how the market performs in the coming months,” Wilk said.
“Buyers have more housing choices and leverage during negotiation than they did this spring, which has made for a more relaxed sales pace in recent weeks, and that’s likely to continue until the Fed moves to lower interest rates.”