2023 Q2 Boston Real Estate Sales Market Report

2023 Q2 Boston Real Estate Sales Market Report

As the second half of 2023 begins, the Boston real estate market has slowed significantly. Total Residential Home Sales have decreased by -27.94% year-on-year for all property types in the first 6 months of 2023. Amazingly, despite the drop in demand for Boston real estate due to the shortage of properties for sale, average selling prices remain high. Here are the key trends affecting the Boston real estate market.

Overall Boston Home Sales Down, Prices Remain High

There were 2,443 total residential real estate transactions in Boston in the first half of 2023, compared to 3,390 for the same period in 2022. Total sales in the Boston real estate market hit an all-time high in June. Boston recorded a total of 607 home sales last June, the lowest total for June in the last 5 years and even below the 610 total sales recorded in 2020 during the peak of COVID.

Despite the significant drop in overall sales, the 30-day average selling price in Boston remains high. The median selling price for all residential property types last month was $827,000, up slightly (+2.09%) from a year ago.

This is due to the decrease in total listings from 1,629 in June 2022 to 1,327 in June 2023, representing a -18.54% decrease in total housing inventory. So while high interest rates have weighed on housing demand, the lack of housing supply has kept house prices from collapsing.

Declining single-family home sales in Boston

Demand for single-family homes in Boston has declined more than any other property type. Last month, there were 86 single-family home sales in Boston, compared to 137 in June 2022. The total number of down single-family home listings fell by -38.83% over the same period, showing that both supply and demand for single-family homes are increasing have declined sharply since a year ago.

Due to the real estate shortage, the average selling prices for single-family houses have even increased by +3.35% year-on-year, even though demand has fallen. The price per square foot for single-family homes was $556 in June, up +4.12% year-on-year.

Reduced demand for condos in Boston

Demand for condos in Boston has also suffered a drop so far in 2023. Total condo sales fell 29.35% last quarter compared to the second quarter of 2022. 450 condo sales recorded last month in June are down from 576 in June 2022.

Despite the drop in demand, the prices for condominiums remain roughly at the level of the previous year. The average selling price for condos is +1.27% compared to June 2022, while the price per square foot ($867) is down slightly at -1.70%.

Boston real estate market 2023 Q3 forecast

If historical trends prevail, we will already have passed the peak of seasonal housing demand in the Boston real estate market. Total sales and average prices typically peak in June and begin to settle down in the late summer months. Boston is expected to see a 20-30% drop in total home sales in 2023, which would drive price drops in any normal market. That may not be the case in Boston.

The Fed did not hike rates in June, although inflation remained above target. The Federal Open Market Committee said it plans two more rate hikes in 2023, which will further erode housing demand as we head into the slow season.

However, the general lack of housing is still driving up prices in Boston. In 2022, Boston had its lowest number of new housing units in seven years. So far in 2023, BPDA-approved residential building permits have declined, which doesn’t bode well for Boston’s tight housing supply. Unless the city and state can help streamline, optimize, and incentivize the process for approving significantly more new projects, prices are not expected to drop significantly in the near future. We will continue to monitor these trends as they develop.

Demetrius Salpoglou
Date of publication: July 18, 2023

Demetrios Salpoglou is CEO of bostonpads.com, an information and technology based services company that provides real estate companies with state-of-the-art resources. Demetrios has developed over 90 real estate related websites and owns hundreds of domain names. Demetrios also owns and operates six leading real estate offices with over 140 agents.

Demetrios has assembled the largest home rental team in the Boston area and is responsible for brokering more home rentals than anyone else in New England – over 120,000 people have found homes through his services. Demetrios is an enthusiastic real estate developer, top trainer, educator, guest lecturer and motivational speaker.