The Federal Reserve cut interest rates by a quarter-point, raising hopes that a housing market long frozen by relatively high mortgage rates might start moving again.
But even modestly cheaper home loans may not be enough to get Greater Boston’s housing market moving again.
Case in point: Home sales in the region remained relatively stagnant in August, even as mortgage rates dropped, according to new numbers out Thursday from the Greater Boston Association of Realtors. Just 1,077 single-family homes sold in the region last month, according to GBAR, which covers most of Greater Boston except the North and South shores. That’s just 2 percent more than sold in August 2024, one of the slowest years for home sales in recent memory.
Home prices continued to recede from a $1 million all-time high set in June, to $935,000.
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“For the first time this year, the median price a single-family property sold for was less than it was originally listed for, but barely,” said Mark Triglione, GBAR president and owner of Premier Realty Group, Inc. in Reading.
The region’s housing market has been effectively frozen since mortgage rates began to climb in early 2022. On top of Greater Boston’s ultra-expensive prices, higher mortgage rates meant that it made little sense for anyone to sell and pay a much higher mortgage rate on their new house. Meanwhile, buyers faced high rates on top of often-prohibitive prices.
The result is that home sales have slumped for three years now.
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Real estate agents for years have speculated that when rates drop, there would be a surge in home sales. But rates have dropped recently — the average rate on a 30-year, fixed-rate mortgage was 6.26 percent last week, according to Freddie Mac, down from more than 7 percent at the beginning of the year — and no surge has yet materialized.
Statewide, single-family home sales actually decreased last month, falling about 2 percent from the number of homes sold in August 2024.
That’s partly because even a modest decline in rates has been overtaken by the surge in prices over the last few years, pricing out many prospective buyers.
The median single-family home price in the region has grown roughly 20 percent over the last four years, from $780,000 in August 2021, when the average on a 30-year fixed-rate mortgage was still well below 3 percent, to $935,000 last month.
And modest mortgage rate decreases don’t significantly change the monthly payment on a new home. For instance, the monthly payment on the median-priced house in August with a 6.26 percent rate on a 30-year, fixed-rate mortgage would be $4,610.43 before property tax and homeowner’s insurance, according to Bankrate’s mortgage calculator. That payment would only fall by $241 if mortgage rates decreased by half a point.
Still, real estate agents are optimistic the Fed’s rate cut may help ignite the market, boosting sales in the typically slow fall and winter seasons. They point to the fact that the number of homes on the market in Greater Boston last month was up 17 percent from August 2024, perhaps an early indication that more sellers are willing to sell after years of holding out.
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“The recent rate news will very likely provide some welcome stimulation to buyer activity,” Triglione said.
Andrew Brinker can be reached at andrew.brinker@globe.com. Follow him @andrewnbrinker.