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As Thanksgiving and the holiday season inches closer, the Connecticut housing market is still seeing prices rise amid a lack of inventory.
According to the latest year-to-date data from The Warren Group, publisher of Banker & Tradesman, the median price of a single-family home in Connecticut climbed to $414,650 in September. This is a 65.9 percent increase from the median price of $249,900 in 2016 and a 10.5 percent increase from $375,000 in 2023.
While the prices of homes continue to increase, the number of sales dropped compared to last year. Through September, 18,738 single-family homes have been sold this year compared to 19,011 in 2023, which represents a 1.4 percent decrease year-over-year.
Michael Barbaro, the president of Smart MLS, believes that mortgage interest rates remaining relatively high and the upcoming presidential election has caused sellers to stay on the sidelines, thus driving prices upwards amid ongoing demand from homebuyers.
“I don’t think we’re going to see prices drop,” he said. “The slowdown I can see is definitely a result of what’s going on with interest rates and even what’s going on with the presidential race. We’re hearing from some of our clients that they’re kind of waiting to see what happens before they before they pull the trigger.”
Inventory Issue Remains
Inventory remains the core issue for the Nutmeg State.
Potential sellers are feeling locked into their current homes as the interest rate of their mortgage is more advantageous than current rates, Barbaro said. Interest rates remain higher than the basement level rates seen during the COVID-19 pandemic and even increased significantly in the weeks since the Federal Reserve’s September interest rate cut thanks to bond investors’ bets on the economy’s future.
Still, according to Smart MLS, the number of new listings in the third quarter was 11,644, up 4.4 percent from the third quarter of 2023. This growth comes as Connecticut only had 1.5 months of housing supply at the end of the third quarter.
“I think the biggest thing we have to keep an eye on is interest rates, and not so that the prices are lower, but so that we can see maybe a little more inventory,” CT Realtors President Carl Lantz said . “I feel like there’s still a good amount of pent-up sellers. I think there’s a good number of people who have that super-low interest rate that they got over the COVID years, and they’re hesitant to list because their monthly is so affordable due to that interest rate, whatever it might be.”
Graphic by Sam Minton | Commercial Record Staff
Population Problems
Interest rates aren’t the only issue to take into account when discussing inventory. Population growth has only constrained Connecticut’s housing supply.
According to census data, the state population is estimated to have increased by 11,264 since 2020. From 2022-2023, census data showed that net international migration increased by 15,264.
“We’re still short on units because of the number of people who are moving into Connecticut and lack of new building. So it’s a pretty complex problem. I don’t see the inventory crunch being solved in the short term at all. I just don’t,” said Jason Mudd, a managing partners of Cindy Raney Team at Coldwell Banker Realty in Westport.
Remote work and return to office policies has had an impact on Connecticut’s housing market, he said.
“We are in a market in Fairfield County that’s very desirable,” Mudd said. “It’s a terrific lifestyle, place to live. Work from home has brought a lot of people to the area. I think while we’re seeing some return to work policies, we’re not seeing a mandate from too many firms that are saying five days a week in the office.”
But if offices in New York are requiring employees to be in the office for at least couple days a week, Connecticut is an intriguing option when looking for a home with more space outside the city, Mudd said.
Cindy Raney, Mudd’s fellow managing partner of Cindy Rainey Team at Coldwell Banker Realty in Westport said that a lot of the clients she deals with come from New York and California and are looking to start a family or already have a family.
In Fairfield County, the median single-family home price rose on a year-on-year basis to $720,000. This is a 12.4 percent increase from 2023.
Looking ahead to the end of the year and beginning of 2025, Mudd believes that affordability will continue to be an issue.
