Home Prices on Precipice of Half a Million Dollars Amid Sales Slowdown

Single-family home sales were down a third in Massachusetts last month but the median price of the relatively few homes that sold set the all-time high for January, a dynamic that analysts at The Warren Group said reflects how few homes are available in the Bay State.

The 2,379 homes sold here last month represented a decrease of 32.6 percent from January 2022 and a drop of 38.3 percent compared to January 2021, The Warren Group said. Meanwhile, the median sale price of $499,000 is up 0.8 percent from a year ago and 11.9 percent from two years ago.

“The lack of inventory in the housing market continued to add upward pressure to the median single-family home price. The 2,379 single-family home sales marked the fewest number of transactions for the month of January since 2011 and the lack of inventory is mostly to blame,” Cassidy Norton, associate publisher and director of media relations for The Warren Group, said. “Add in the fact that interest rates are nearly double what they were a year ago and the rising cost of consumer goods, and we can expect sales numbers to continue their downward trend in the coming months.”

The Massachusetts housing market shows signs of a cooldown at the end of 2022 after two years of double-digit increases in prices and inventory that couldn’t keep up with demand. The Warren Group said last month it expects that to be the theme of 2023 because homes in Massachusetts cost more than buyers are willing to spend, inventory is drying up and rising mortgage rates make a purchase even more costly.

The story was similar for the condominium market, The Warren Group said. Last month’s 1,178 condo sales were down 27.9 percent from last January and the median sale price spiked 9.2 percent year-over-year to $480,500 — also a new record for the month of January.

“Historically, condos were a more affordable alternative to single-family homes, but that doesn’t appear to be the case any longer,” Norton said.

Gov. Maura Healey declared high housing costs “unacceptable for our people, our businesses and our state’s future” in her inaugural address and is expected next month to file long-promised legislation to create a standalone secretary of housing, splitting it off from the current Executive Office of Housing and Economic Development.