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December 23, 2024
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Real Estate

Seacoast NH 2024 home sales could rise as interest rates dip


Fewer single-family home sales and ever-rising purchase prices in the Seacoast and across New Hampshire defined the 2023 real estate market.

But the tide could be turning, as market experts anticipate lower interest rates will drive sales up in 2024.

“The good news is that the Federal Reserve has signaled their intent to cut rates at least three times in 2024, and that news has analysts predicting (mortgage) rates will drop back into the low to mid-6% range,” said Jamieson Duston, principal and co-owner of Duston Leddy Real Estate in Portsmouth. “The sentiment amongst realtors working in the Seacoast market is that there are a significant number of ready, willing and able buyers that have been sitting on the sidelines waiting for rates to drop, and as soon as they do, we will see a spike in activity that could resemble the 2020-2021 market. For those sellers considering selling, the next several months should be an ideal time.”

The Fed is scheduled to meet Jan. 30-31 and again March 19-20, with five more meetings scheduled in 2024.

The Seacoast Board of Realtors collects real estate transaction data from 13 area communities:  Exeter, Greenland, Hampton, Hampton Falls, New Castle, Newfields, Newington, North Hampton, Newmarket, Portsmouth, Rye, Seabrook and Stratham. In 2023, there were 650 single-family home sales in those communities, a 25.1% drop in volume from 2022, the board reported. 

Among those sales, however, the monthly median sale price was $760,000, a 6.6% year-over-year increase. High-end homes, often with cash buyers who don’t have to worry about mortgage interest rates, dominated the market. The board noted last year’s Seacoast condominium sales showed the same trend: 548 units sold last year, a 13.4% drop-off, though the median price rose 9.2% to $567,850.

Seacoast real estate: Here are 11 highest-priced home sales of 2023

A consensus is interest rates, elevated in the recent past by the Fed to curb inflation, have taken many people out of the search for a new home, leaving limited single-family home inventory open to bidding wars from wealthier buyers. If interest rates do decrease, several local market experts expect patient buyers to reemerge and pounce on available housing stock. 

Duston’s business partner, Joe Leddy, is optimistic local sales will increase after sluggish totals the last few years. Still, unpredictability exists.

“I think there’s such pent-up buyer demand because a lot of them are waiting in the wings,” Leddy said. 

In December, the Federal Reserve kept its benchmark short-term interest rate at 5.25% to 5.5%, a 22-year high, for the third straight time, while also announcing the expected three rate cuts in 2024. Though it’s still possible interest rate hikes could come in 2024, Federal Reserve Chairman Jerome Powell said at the time, it is “not likely.” 

Bankrate, a New York City consumer financial services company, this week reported the national average for a 30-year fixed mortgage was 7.07%. Average 30-year fixed mortgage interest rates nationwide peaked in late October at 8.09%, according to Bankrate. 

Home lender sees hopeful signs in 2024

Anna-Lisa Cousins, owner and operator of Portsmouth-based Cousins Home Lending, said her business and others in the mortgage industry saw a “significant decline” in home loan applications last year. 

“Obviously, a huge factor was the interest rates. I believe interest rates were kept artificially low for too long and as time went along, things needed to be adjusted, but it’s easier to kick the can down the road,” she said. “I believe if the Fed had raised rates slowly, then the natural progression would have worked itself out. But instead, we had significant rate increases in a relatively short period of time.”

Strafford County real estate: Dover homes dominate top 10 highest priced sales of 2023

Yet, for several reasons, she feels “cautiously optimistic” what happened last year won’t repeat in 2024.

“One of several reasons is because what happened with rates in 2023 happened so quickly that there really wasn’t enough time for the average person to digest it all,” she said. “The knee-jerk reaction for buyers was (to) wait, but while waiting, it seemed to just get worse. I think the vast sentiment was to wait it out as prices were still perceived as high and typically there is an inverse relationship. So what we saw was something we haven’t seen before. Being in unchartered territory post-pandemic is concerning and top it all off, inflation. Sellers held off listing their properties, as it’s a tough pill to swallow to sell your house with a low mortgage rate and then jump into another with a higher rate.  However, rates have been slowly coming down.”

This year, Cousins forecasts an increase in mortgage applications after last year’s dip. That would build off the momentum her company saw in the fourth quarter, its best period of 2023.

“I think 2024 will bring lower rates but we are not going back to the 3% range on a 30-year fixed (mortgage) – that chapter has closed in my opinion,” she said. “The sooner people understand that and accept it the better, (and) we can progress forward. Another reason I think mortgage applications will increase is because both Fannie Mae and Freddie Mac have new first-time home buyer programs that have lower rates or grant programs. The definition of first-time homebuyer is (that) you haven’t owned a home in the last three years.”

Though perhaps not in 2024, Leddy anticipates interest rates will settle around the 5% range. In his experience, however, buyers are jumping back into the market without further rate increases, as a home he listed for $450,000 before the new year drew 35 people to an open house. 

“They’re getting their second wind now and are coming back into the market,” he said of the buyer pool.

NH housing shortage weighs on market

Joanie McIntire, president of the New Hampshire Association of Realtors in 2024, said the flow of last year’s market, a frenzied spring followed by a quieter summer and another slowdown after Thanksgiving, resembled past years. But in 2023, just as they did in the Seacoast, statewide single-family home and condominium sale prices shot up while the overall number of sales decreased.

Data from NHAR shows there were 11,620 detached single-family home sales in New Hampshire last year, down 19.1% from the 14,360 sales the year before. But the median sale price increased from $440,000 in 2022 to $470,000 last year. 

Just 3,836 condominiums sold in the Granite State last year, a nearly 16% dip, though the median sale price jumped 10.1% to $380,000.

“In 2014, there were about 10,000 houses on the market in November. We are so far off from that,” McIntire said. “What I hope for is a balanced market. I hope we get to a point where buyers and sellers are on the same equal footing.”

The state’s housing shortage is due in part to the decrease in building within the state since 2008, she continued. Years later, that slowdown is impacting the New Hampshire working class’ ability to find and afford a home, and NHAR is advocating for municipalities to reexamine local regulations.

“Our population is hearing that the shortage is so severe that people who are working in hospitals, nurses, phlebotomists, policemen, teachers, they’re having a really hard time finding housing,” McIntire said. “We need to produce more housing for them. I think the way we do that is to loosen zoning laws in the state.”

Even if those changes happen, the state is years away from making progress on its housing unit shortage, she said. Could a decline in interest rates help in the near term?

“I’ve heard from different sources… that there will be as many as three cuts to interest rates this year and that they possibly could be down to the mid-to-low 6s, which I think would help,” McIntire said. “We have a lot of pent-up buyers and a lot of sellers who are waiting to see what happens. There’s some good hope that they’ll start listing and that’ll grow inventory. But we’re at such a shortage.”

Consumer confidence seen as key in Seacoast real estate market

John Rice is the statistician for the Seacoast Board of Realtors and a Tate & Foss Sotheby’s International Realty associate broker. He said a key indicator in the local real estate market’s success is consumer confidence. Though technically an unmeasurable metric, he said he sees high consumer confidence in the greater Seacoast, pointing to bidding wars for homes, consistently high sale prices, how quickly homes are snatched off the market, and a steady stream of buyers from out of state. 

What will it take for the inventory of homes for sale to grow this year? Interest rates will be key, he said, echoing the common theme.

“The first thing is interest rates need to drop so that people who own their home can feel that they can finally get out of the big place they’re living and downsize because it’ll make more economic sense,” Rice said.

Rice envisions interest rates declining this year, with Seacoast single-family home and condominium inventory growing, the volume of condominium sales overtaking single-family homes, and sale prices among all homes possibly dropping.

But nothing’s a sure bet.

“It’s not an easy market to predict what’s going to happen,” Rice said. “Some people are all doom and gloom and some people are excited about what’s going to happen. There is a lot of uncertainty.”



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