The average cost of homes sold in Connecticut increased by more than 8% at the end of last year, hinting at the projected market outlook this year.
Michael Barbaro, a New Haven-area real estate broker, also acts as president of Connecticut’s SmartMLS system, which tracks housing market sales and trends across the state.
Barbaro expects the market to get worse. The high cost of housing is also preventing more homes from going up for sale, according to MLS statistics from the last quarter of 2024.
“Many are telling me it's more economical for them to stay in place where they are right now, with extra space and extra bedrooms that they don't need, rather than make the move and pay more money for a smaller place, just doesn't really make a lot of sense today,” Barbaro said.
Rising interest rates also place an extra barrier for people looking to purchase a home, Barbaro said.
“Interest rates are higher than they were,” Barbaro said. “They're not historically high, but there are people in this marketplace today that are still looking for a home, that were looking for a home when interest rates were half of what they are today.”
The list price for homes on the market have increased due to the lack of housing inventory statewide. The largest shortage is among homes priced at about $400,000 and lower.
Older couples, many of whom have already paid off their mortgage, would incur extra costs if they were to purchase a new home in this market, Barbaro said.
“They're at the age where they want to downsize, but it would literally cost them more money to downsize than it would to stay in their house now, continue paying their property taxes, and even hire people to do the things that they're just feeling like they don't want to do anymore.” Barbaro said.
Fairfield County had the highest number of home sales at the end of 2024, with more than 2,200 sales.
A recent report found Connecticut has the most constrained housing market in the nation, meaning there’s very high demand and very few homes on the market, according to data from the public policy research firm ECOnorthwest.
“When we lined up every single state, Connecticut is the most constrained housing market of any state in the country, with effectively a 7% vacancy rate,” ECOnorthwest researcher Michael Wilkerson previously said. “That's indicative of, I think, what everyone here knows and understands, which is a very challenged housing market in terms of affordability and availability of housing.”
