How Higher Mortgage Rates Are Impacting Massachusetts’ Single‑Family Homes Market in 2025

With yesterday’s decision to leave the key interest rate steady, while potentially planning for one or two interest rate reductions by the end of 2025, we’re at a pivotal moment in the Massachusetts housing market. Rising mortgage rates are reshaping buyer behavior and impacting affordability—and the ripple effects on supply and prices are slowly impacting the market.

The lower end and condo/multi-family sectors of the market are strongly affected by mortgage rate fluctuations. However, looking at the data for single-family homes over the past year, we’re still seeing a robust seller’s market at the MA state level. 

Key Stats & Market Snapshot (As of May 31, 2025):

• Median price of single-family home in MA: $650,000 (up +4.2% year-over-year) 
• Inventory: 6012 single-family homes for sale (+25.7% year-over-year); average days on market: 21 days (up 5%)
• Home sales: 12,638 homes sold year-to-date as of May 31, 2025 (+0.3% compared to same time in 2024)
• Sellers received a median of 100% of original list price, which is indicative of a continued strong seller’s market.
• Short sale units and Lender-Owned units sold were both down; 14 short sales year-to-date 2025, compared to 24 in 2024, down 41.7%; Lender-Owned units sold was 110, down from 170 in the same time in 2024, a decrease of 35.3%.   (source:MLS Pinergy)

Historical Context:

• A rapid drop in rates during 2020–21 led to widespread refinance activity—but now, with rates nearly double its pandemic lows, many homeowners are “locked in” with old low rates, reducing market listings.  This favorable interest rate situation combined with the increase in prices over the last few years, are making the decision to move less attractive for home owners.

What Experts are predicting for 2025–26:

• Boston Globe: Rates are expected to trend downward into “high‑5s or low‑6s” by end of 2025—helping boost inventory modestly.
• Greater Boston Association of Realtors® foresees 5–8% more sales and stable or slightly higher prices.
• Fannie Mae panel: Forecasting 3.8% national price growth in 2025 and 3.6% price increase in 2026.
• The National Association of Realtors®:  Anticipating mortgage rate levels around 6% in 2025, slower price growth around 2%, and expects Boston to be among the top 2025 “hot markets” with higher price growth than most U.S. markets.

Market Implications:

• Buyers: Despite strong competition, rising inventory and easing rates may open windows of opportunity, especially for well‑qualified buyers.  Pre‑approval and support from a local real estate agent who can strategize about how to position an offer are essential to succeed in today’s market.  Be prepared to act quickly when opportunities arise.
• Sellers: Will still benefit from low supply and solid price levels—but need to price thoughtfully and realistically to attract the most qualified and motivated buyers. Consider upfront professional inspection, home appraisal, decluttering and staging, home repairs and improvements in order to ensure a smooth sale without unexpected complications in the process.

The Bigger Picture:

• We’re trending toward a more balanced market—inventory growing, rates falling modestly, buyers returning—shifting away from the red‑hot seller's dynamic of recent years.  However, Massachusetts and especially the greater Boston area continue to be strong seller’s markets with expectations for continued higher demand than supply and price appreciation.  
• Sellers are advised to carefully strategize about how to price their home for the market and to have realistic expectations about the process.  The better prepared, the more successful a sales process will be.
• Buyers will benefit from working with a seasoned local market expert agent who can help navigate the competition and complexities of the market and offer professional and timely strategies and support for a successful home purchase.