The NH Housing Market Report by the New Hampshire Housing Finance Authority describes a market in “turmoil, buffeted by rising interest rates and economic uncertainty that presents extraordinary challenges for renters and homebuyers.” The recent increases appear to be tamping down demand somewhat, as they have impacted the affordability of purchasing a home.
The report also says that the production of new housing has lagged behind demand for decades in the state. It would take at least 20,000 housing units to achieve a balanced real estate market in New Hampshire, with a rental vacancy rate of 5% and a six-month housing supply. New Hampshire's rental vacancy rate hovers around 1% and the availability of homes for sale is currently less than one month.
So, there is a huge gap between housing supply and demand in this state. The most obvious solution to our state's housing problems is to build more homes and eliminate zoning restrictions that prevent this from occurring. Several short- and long-term initiatives are currently underway to increase the housing supply.
Data presented by the NH Housing report and echoed by the NH Association of Realtors indicates that the lack of sufficient inventory, both existing homes listed for sale and new units under construction, continues to sustain record high housing prices, which have been augmented by rising financing and construction costs.
New Hampshire Housing Report For July 2022
The New Hampshire housing market is still strong despite rising mortgage rates. Prices for homes in New Hampshire are also at record levels. The median sale price for a home is $450,000, which is an increase of 11.1% from last year ($405,000), according to the latest report released by New Hampshire REALTORS
- New Listings decreased by 12.7 percent for single-family homes and 5.6 percent for townhouse-condo properties.
- Pending Sales decreased 8.6 percent for single-family homes and 3.6 percent for townhouse-condo properties.
- Inventory decreased 4.4 percent for single-family homes and 5.4 percent for townhouse-condo properties.
- The Median Sales Price was up 11.1 percent to $450,000 for single-family homes and 15.3 percent to $340,000 for townhouse-condo properties.
- Days on Market decreased 5.9 percent for single-family homes and 25.0 percent for townhouse-condo properties.
- Months Supply of Inventory increased 6.2 percent for single-family homes and 8.3 percent for townhouse-condo properties.
The housing affordability index, calculated by the NHAR, measures whether a median household earns enough to qualify for a 30-year fixed rate mortgage to purchase a median-priced single-family home, assuming a down payment of 20 percent, without paying more than 25 percent in principal and interest. An index of 100 or more indicates sufficient income to qualify. Since 2005, when the index was introduced, it has seldom dipped below 150, and in 2013 near 300. In July 2022, when the median sale price of single-family homes was $450,000, the index fell to 75.
5 Hottest Real Estate Markets in New Hampshire
Data by Redfin shows that in July 2022, 62.6% of homes in New Hampshire sold below list price, down 4.3 points year over year. There were only 21.6% of homes that had price drops, up from 15.0% of homes in July last year. There was a 103.3% sale-to-list price, down 0.3 points year over year. Here are the 5 hottest housing markets in the state of New Hampshire.
1. Nashua, NH
The Nashua, NH housing market is extremely competitive. Homes in Nashua receive 7 offers on average and sell in around 6 days. The average sale price of a home in Nashua was $434K last month, up 11.3% since last year. The average sale price per square foot in Nashua is $252, up 14.0% since last year. Hot homes in Nashua can sell for about 11% above the list price and go pending in around 4 days.
2. East Merrimack, NH
The East Merrimack housing market in NH is extremely competitive. Homes in East Merrimack receive 10 offers on average and sell in around 7 days. The average sale price of a home in East Merrimack was $459K last month, up 8.6% since last year. The average sale price per square foot in East Merrimack is $227, up 12.7% since last year. Hot homes in East Merrimack can sell for about 11% above the list price and go pending in around 5 days.
3. Hudson, NH
The Hudson housing market in New Hampshire is very competitive. Homes in Hudson receive 6 offers on average and sell in around 9 days. The average sale price of a home in Hudson was $410K last month, up 28.1% since last year. The average sale price per square foot in Hudson is $231, up 15.2% since last year. Hot homes in Hudson can sell for about 9% above the list price and go pending in around 4 days.
4. Derry, NH
The Derry housing market is very competitive. Homes in Derry receive 7 offers on average and sell in around 7 days. The average sale price of a home in Derry was $420K last month, up 1.1% since last year. The average sale price per square foot in Derry is $253, up 19.6% since last year. Hot homes in Derry can sell for about 11% above the list price and go pending in around 5 days.
5. Durham, NH
The Durham housing market is very competitive. The average sale price of a home in Durham was $632K last month, up 37.1% since last year. The average sale price per square foot in Durham is $277, up 17.6% since last year. Hot homes in Durham can sell for about 14% above the list price and go pending in around 5 days.
New Hampshire Housing Market Forecast
The forecast is that in the second half of 2022 sales will slow, days on market will increase, and there will be fewer offers well above the asking price. As a result, the hot seller's market in New Hampshire will cool a bit from its current record-high demand and record prices.
Several factors support the NH housing market and its bright outlook for the future. Economic indicators continue to indicate that New Hampshire's economy is robust, with steady employment opportunities. Since 2021, the inflation rate, as indicated by rising prices for goods and services, has been on the rise.
A higher unemployment rate makes it more difficult to sell a home, which reduces the propensity of homeowners to relocate. When the unemployment rate falls, there are consequently more buyers and sellers. In March 2022, New Hampshire's unemployment rate dropped to 2.4%, well below New England's and the national average.
There are numerous opportunities for workers to switch jobs and potentially increase their income. The state's businesses are having difficulty recruiting and retaining workers due to the low unemployment rate. The lack of housing for this workforce is a significant concern for many of the state's businesses.
In Q1 of 2022, New Hampshire continued to have the lowest rate of mortgage delinquencies (3.14%) compared to other New England states. NH has the 12th lowest rate of delinquencies in the US (Washington state had the lowest at 2.29%) in Q1 of 2022. The number of foreclosures in New Hampshire remains low.
We continue to hear rumors of a market crash, but local data does not corroborate this at this time. Even if minor, the monthly figures indicate that the market has begun to cool. According to Zillow, the typical value of homes in New Hampshire is $436,623. New Hampshire home values have gone up 17.5% over the past year and 66.65% over the past five years.
Real Estate Market Statistics in New Hampshire & MSA Forecast for 2023
|Zillow Home Value Index||$436,623|
|Home Value Change YoY||+17.5%|
|Average Rent Price Change YoY||+103.96%|
|Is New Hampshire a Buyer’s or Seller’s Market||Seller’s Market|
|Manchester MSA One Year Home Values Forecast||+3.2%|
|Claremont MSA One Year Home Values Forecast||+5.2%|
|Concord MSA One Year Home Values Forecast||+4.8%|
|Keene MSA One Year Home Values Forecast||+4.5%|
|Laconia MSA One Year Home Values Forecast||+6.7%|
|Berlin MSA One Year Home Values Forecast||+2.4%|
Conclusion: We're not seeing any major home price decline or crash in the New Hampshire housing market just yet. The present supply of homes still favors sellers and will keep the prices from falling in 2022 and 2023. In July 2022, the monthly supply of single-family homes was 1.7 and the monthly supply of condos was 1.3.
According to New Hampshire REALTORS, in 1998, the median price of a single-family residence in New Hampshire was $127,500. This number increased to $270,000 in 2005, a remarkable 112% increase, and then dropped to $202,000 over the next seven years, in part due to the collapse of the subprime mortgage market brought on by defaults on high-risk housing loans.
Prices have been steadily climbing ever since 2012, and though housing market fundamentals are not comparable to those which prompted the recession, the steady increase in median price — rising to $395,000 in 2021 and heading for well over $400,000 in 2022 — has created an affordability and availability crisis, particularly among the first-time homebuyers so essential to a strong workforce and a healthy New Hampshire economy.