New Hampshire Housing Market Hits Record Highs, But Affordability Crisis Persists
Introduction: The real estate market in New Hampshire continues to break records, with the median price of homes reaching an all-time high in May 2023. However, this surge in prices comes with a concerning decline in affordability, creating challenges for prospective buyers. Let's dive deeper into the latest statistics and trends shaping the NH housing market.
Record-High Median Price: May witnessed a milestone as single-family residential homes in New Hampshire sold at a median price of $465,000, setting a new record for the state. This upward trend reflects the ongoing demand for housing.
Affordability Crisis: While the rising prices may signal a flourishing market for sellers, the affordability index paints a different picture for buyers. In May, the affordability index dropped to 66, the lowest ever recorded by the New Hampshire Association of Realtors (NHAR). This index signifies that the state's median household income is just 66 percent of what is required to qualify for a home at the median price. It represents a significant decline of 36 percent over the past two years. To put it into perspective, the affordability index in May 2013 stood at 180, highlighting the substantial shift in housing affordability over the past decade.
Inventory Challenges Persist: The tight inventory situation remains a critical factor affecting the market dynamics. At the end of May, there were only 1,489 single-family residential homes available for sale in New Hampshire, reflecting a 10 percent decrease compared to the previous year. This limited supply represents a mere 1.4 months' worth of inventory, far below the balance typically seen in a healthy market, which is considered to be 5-7 months of inventory.
Declining Sales Activity: The constrained inventory has contributed to a decline in sales activity. In May 2023, 959 single-family residential homes were sold, marking a 22 percent decrease compared to May 2022. Moreover, when comparing the first five months of 2023 to the same period last year, sales have experienced a notable 21 percent decline (see more data here).
Conclusion: The real estate market in New Hampshire has reached new heights with record-breaking median home prices, which is great for sellers. However, the soaring prices have created an affordability crisis, where the median household income falls short of what is necessary to qualify for a median-priced home. The limited inventory continues to pose challenges for buyers, leading to decreased sales activity.
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