High mortgage rates, low inventory lead to 7.4% drop in home sales in Massachusetts
BOSTON - High mortgages rates, high prices and low inventory are making homes tough to sell in Massachusetts.
Steepest drop in home sales in more than a year
A two-bedroom apartment on Mansfield Road in Boston is for sale and broker Dante Brezzene and the Movement Group are working to find the right buyer. But it hasn't been easy.
In the month of March, home sales in the US fell 4.3%, the steepest drop in more than a year. Last month in Massachusetts, there was a 7.4% decline in sales from March 2023.
"In Boston proper it was a little bit more difficult in some aspects," said Bruzzese.
Why is nobody buying?
But why is nobody buying?
"The biggest challenge has to do with higher mortgage rates. The second challenge. the availability of housing. There's just not a lot of homes on the market, that means sellers can command high prices. That's a double whammy. High prices, high mortgage rates," said Professor of Economics at Boston College Peter Ireland. "When you think about disposable income for an average American family, it's just going to be very, very hard to finesse."
And potential buyers may be looking for other options. Let's say you're trying to buy a $1 million home at a 7% mortgage rate. That's a $70,000 a year mortgage payment and nearly $6,000 a month. Why not just rent?
"Oh yeah, I think that that's already started. Housing affordability, especially for young people, that's a real challenge," said Ireland.
Ireland predicts mortgage rates will soon decline but he's concerned without inventory, prices may remain high.
"A national priority needs to be home affordability, figuring out how to increase the supply of newly-built homes," said Ireland.
In the meantime, brokers like Bruzzese remain optimistic.
"We want to get that call back in three, four, five, years and say, we're very happy here," said Bruzzese.