In October, people looking to buy a home in Massachusetts faced the thinnest inventory in more than a decade, record high prices and expensive borrowing costs.
There were 3,515 single-family homes sold in Massachusetts last month — down 16.9% from the 4,228 homes sold in the same month last year, and the fewest number of single-family home sales for any October since 2011, The Warren Group said in its monthly real estate data.
With the options for prospective homebuyers relatively few and far between, the median sale price for a single-family home jumped 10.6% year-over-year to $575,140, The Warren Group said. Like September's $565,000 median sale price, October's mark set a new all-time high for the month.
"Home sale prices in October climbed to the highest they've ever been during this time of year," Cassidy Norton, associate publisher and media relations director at The Warren Group, said. "Inventory is far below historical norms, and limited choices make it more difficult to find a home. And record high prices paired with rising interest rates make the task of buying a home that much more formidable."
Between January and October, there was a total of 34,515 single-family homes sold in Massachusetts this year. That represents a 23.9% decline from the first 10 months of 2022. The year-to-date median sale price is up 3.6% from last year, at $570,000, The Warren Group said.
Potential homeowners are running out of options in Massachusetts, the group said in its October analysis. Last month's 1,562 condominium sales marked a 9.4% decrease from a year ago while the median sale price climbed 4.4% to $500,000. Year-to-date, condo sales are down 19.7% and the median price is up 4.9% to $515,500.
"Massachusetts condo prices soared to a record high in October, setting a new benchmark. Condos previous offered a more affordable purchase option; arguably, at just $75,000 less than a single-family home, those times are over," Norton said.
High interest rates are affecting would-be homebuyers, and potential sellers. With rates as high as they are now, some prospective buyers have to limit their options because it is far more expensive to borrow money than it was two years ago. And people who are locked in at a much lower mortgage rate are less likely to give that up by making their home available for sale.
As of Thursday, the average interest rate on a 30-year fixed-rate mortgage was 7.44% APR, according to data compiled by Freddie Mac. A year ago, the average interest rate was 6.61%, and two years ago it was 3.10%, Freddie Mac said.
Gov. Maura Healey and Housing Secretary Ed Augustus have hit the road over the last month to tout the five-year, $4.12 billion housing bond bill that they think will help to ease the housing crunch.
In Attleboro last month, Augustus said that 1.6% of housing units across Massachusetts were available for sale or rent, calling it the lowest vacancy rate of all 50 states. "A healthy housing ecosystem should be 4 to 5% vacancy rate at any given time, which empowers a consumer to be able to get a rental unit or to make a reasonable offer on purchasing a home," he said.
Healey has tried to attach a level of urgency to her bill (H 4138), suggesting it will be a missed production opportunity if the policies in her bill are not law before the spring construction season gets underway.
The bill is now in the hands of a Legislature that has struggled to meet its own deadlines or reach agreement quickly. Healey's housing bill has not moved since it was sent to the Housing Committee on Oct. 18 and the Legislature is currently in a seven-week stretch of limited activity.