iStock illustration
The Massachusetts spring housing market was supposed to be buzzing and more affordable this year. The sluggish market we actually got has been anything but that.
Agents and brokers blame escalating mortgage rates thanks to the Iran war and lurking fears about the local economy.
Through the first four months of 2026, single-family home sales are down 3.3 percent year-over-year, with 10,013 trading hands statewide according to The Warren Group, publisher of Banker & Tradesman. The number of condominiums sold statewide – 3,721 – was also down, by 2.3 percent year-over-year.
And one major measure of how competitive the market is – the growth in home prices – shows sluggishness, as well. The median year-to-date single-family home sale price rose just 2.1 percent, while the same figure for condos actually fell 2.3 percent.
Surge in Interest Rates
Interest rates are playing a major factor keeping much-needed inventory off the market according to John Veneziano, broker/owner of RE/MAX Andrew Realty Services in Medford.
“The biggest issue we’re having right now is what is happening with the interest rate,” he said. “I think because of this Iran situation, Fed situation, there’s a delay.”
The current average 30-year fixed-rate mortgage ended last week at 6.53 percent according to mortgage-buyer Freddie Mac, driven up from 5.98 percent in late February by bond-traders’ concerns about the sudden cutoff in Persian Gulf oil supplies caused by the American-Israeli war on Iran.
While the full impact of that cutoff reportedly won’t be felt for some time, its early effects have hit Massachusetts at the gas pump. The average price of a gallon of regular gasoline ended last week at $4.45 in Greater Boston, up from $4.08 a month ago and $3.01 a year ago, according to AAA.
Massachusetts and the Northeast in general are greatly affected by increases in energy crisis according to Associated Industries of Massachusetts Executive Vice president Christopher Geehern.
While the Massachusetts economy is resilient, rising costs are having an impact. Geehern, the business group’s head of public affairs, said that the state’s job market is stagnant even though personal income and economic growth has remained strong or exceeded expectations.
According to Census Bureau data, the median household income in the state is $104,828, the highest among all states (the District of Columbia was top overall).
High Price of Homes Keeps Out Buyers
But even with these high earnings, households are struggling to afford homes.
According to data compiled by economists the listings portal and brokerage Redfin, the median Greater Boston resident would have to spend 48.8 percent of their income each month to afford payments on the median-priced home.
In some cases, these high costs are even driving buyers out-of-state, even if it’s hard to say exactly what effect these departures have had on this year’s spring housing market. Over the last 21 years 145,648 more residents swapped New Hampshire for Massachusetts than Granite State residents headed south, census data shows.
‘There’s a personal side to this as well,” Geehern said. “I can’t tell you the number of employers that made to me the same story, which is good worker, young family comes in and says ‘I really like working for this company, but I either I can’t afford to buy a house for my family, can’t afford to live here, can’t afford the daycare, so we’re moving.’”
Interest rates ratcheting up under the influence of bond traders worried about the Iran war have pushed Massachusetts homebuyers out of the market, experts and data say. iStock illustration
Did Many Sellers Over-Price?
After tariff-driven economic uncertainty had buyers hitting pause at the start of 2025, this year has delivered more of the same, according to Brian Caluori, a Realtor with Gibson Sotheby‘s International Realty who primarily operates in Boston.
This is causing buyers to be more selective when it comes to homes, taking some sellers by surprise.
“My clients are ready to make a move, but only if they really walk into something and love it,” he said. “I’ve seen a lot of price reductions on properties that have come on in the last couple of months, where sellers typically thinking spring market is going to be really great, have priced aggressively or overpriced their properties. I think, with everything going on with politics and the economy, buyers are less eager to overpay for something.”
The occurrence of price drops has recently dropped on a year-over-year basis in April but still around 2 in 10 single-family and condo listings are cutting their prices (21.9 percent) according to Redfin in Massachusetts. On average, the typical listing’s price is being cut by 4 percent.
Year-over-year, the statewide sale-to-list ratio has dropped by 0.9 percentage points, to 99.9 percent, in April according to Redfin data. Additionally, 39.4 percent of homes are selling above the original listing price, a 6.7 percentage-point drop.
Renting’s Alure in Face of Job Fears
While international events might be driving the jump in interest rates, more local concerns also appear to be affecting buyers. The health of major economic sectors, like higher education and biotech research, is of particular concern.
These types of issues particularly affect first-time homebuyers and buyers who are looking at the lower ends of the market.
“A lot of times it can make more sense to continue to rent rather than to buy,” Caluori said. “I’ve been selling a few properties in the city where your mortgage would be 10 to 15 percent higher than what it would cost to rent the same property. While building equity is great, I think with the job market uncertainty, people are taking that lower commitment on renting as just a way to take a step back from the sales market.”
In Greater Boston, the gap between the typical monthly mortgage payment and the typical monthly rent dropped by $412 or 62.2 percent year-over-year in March, the most recent data available from economists at Realtor.com.
Across Massachusetts, the closest gaps between rents and mortgages existed in Hampshire County – a $99 gap according to mortgage data from Redfin and rents observed by the listings portal Zillow – The largest gap is in Middlesex County where the gap between rents and mortgages is $1,632 per month. In Suffolk County, the gap is $1,323.
Few Entry-Level Homes
That’s made worse by the lack of entry-level homes on the market.
In Suffolk County – home to Boston – 510 of the 3,271 single-family homes and condos listed between Jan. 1 and April 30 hit the market with prices between $1 million to $1.49 million, according to MLS PIN data.
In Norfolk and Middlesex counties, over 35 percent of homes listed in that window were priced over $1 million according to MLS PIN; in Essex County, over 23 percent.
In turn, higher-end homes now make up the largest single share of homes trading hands.
And according to MLS data compiled by Redfin, the largest share of pending sales in Massachusetts are happening with properties that are between the 65th and 95th percentile of the market’s price range, sitting between the non-luxury and ultra-luxury markets. In April, 4,949 of 16,121 pending sales in Massachusetts were in this range.
There have been just 748 pending sales properties with prices below the 5th percentile of the market’s price range, accounting for just 4.64 percent of total pending sales.
“There’s a lot more high-end inventory, just because it takes longer to sell,” Caluori said. “A lot of those homes are inherited by kids who can’t afford the taxes, so they clean out the houses, they debate whether they’re going to keep it. The homes that are for first time buyers, they are the ones that are waiting a lot more.”
Sam Lattof
Will Market Rebound?
There is some hope that the economy will improve, and with it, buyer confidence.
Business leaders are confident that the life science sector is going to continue to be the cornerstone of the Massachusetts economy according to Geehern, of the Associated Industries of Massachusetts.
“If you look, a lot of the research cuts have already been stayed in the courts, or are being challenged in the courts, or the federal government has changed course,” he said. “So, the actual reductions in research funding have been less than they appeared, or less apocalyptic than they have appeared at the outset. Most business leaders anticipate that these court challenges will continue, the sector will hunker down. Will there be layoffs? Yeah, we’ve already seen them, but that long-term the infrastructure in Massachusetts for research businesses is so strong that ultimately that sector will recover and will continue to grow.”
But considering that sales have been slow to start 2026, it will be difficult for sales activity to recover this year, said Caluori, the Boston-based Gibson Sotheby’s agent.
“I think there’s just a little bit too much political instability where, unless we can find some even keel that helps bring the bond market down, and then rates down, I think it’s going to be unlikely [that there is a demand surge],” he said.
