Home Prices in One State Skyrocket

Home prices in New Hampshire soared to their highest on record in March, straining the ability of first-time home buyers to afford to purchase a home and pointing to a crisis in the housing market for average Americans looking to make the plunge to homeownership.

The median sale price of a single-family home rose nearly 12 percent last month to $500,000 compared to a year ago, according to the New Hampshire Association of Realtors (NHAR), the highest level yet in the state’s history. The jump in prices is hurting affordability, which declined by 16 percent from last year.

Realtors in the state say that the lack of enough supply of houses is helping to push up prices.

“The problem remains the shortage of available housing that is continuing to make homeownership more difficult than ever for those workers needed to help an economy thrive,” Joanie McIntire, president of New Hampshire Association of Realtors, said in a statement.

The state’s realtors point out that its affordability index dropped to 59 last month. This suggests that residents in the state are earning 59 percent of the amount needed to be able to afford to purchase a house, the lowest reading since 2005.

The association said depleted inventory is the main reason why house prices in the state are so elevated. Single-family homes available for sale dropped by 2 percent from a year ago to about 1,230 homes, a 1.3 month of supply. A healthy market needs between 5 to 7 months of supply, according to NHAR.

The housing market in the U.S. has struggled amid elevated mortgage rates and expensive prices. After hitting a peak of 8 percent in the fall, borrowing costs for home loans had steadily declined in December and January to the mid-6 percent. But over the last few weeks, mortgage rates had inched up to around 7 percent. This was partly due to economic news signaling that the central bank, which had hiked rates to slow down out of control inflation, may delay its cuts to interest rates.

On Friday, mortgage rates closed slightly down but still stayed above 7 percent, according to Mortgage News Daily. The 30-year fixed rate from lenders averaged at the 7.25-7.375 percent range, they pointed out at the end of last week.

In New Hampshire, the market in March did exhibit some silver linings. Pending sales—a forward looking indicator for home sales—was up by about 11 percent to 922 for March compared to a year ago. Meanwhile, the volume of closed sales ticked up by 6 percent to about $400 million during the same time period.