New Hampshires housing market saw dramatic shifts between 2018 and 2023.
Their choices spanned a range of home types, including single-family houses, condominiums, and manufactured homes.
From 2018 to 2023, New Hampshires housing market became extremely competitive for buyers.
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Home prices rose steadily at first, then sharply.
One major reason for the price surge was limited inventory.
For context, in December 2017 there were around five times as many homes available.
Strong demand also drove the market.
Rising Prices and Affordability Challenges
Home prices in New Hampshire saw record-breaking growth from 2018 to 2023.
But in 2021, six different months had a median price over $400,000.
The annual median price in 2021 was $395,000, an 18% jump from 2020.
By 2023, the median single-family price hit approximately $470,000.
These price increases far outpaced household income growth.
Housing is generally considered affordable when it consumes 30% or less of income.
The Affordability Crisis
The New Hampshire Association of Realtors housing affordability index reflects this strain.
In 2021, affordability had already dropped to its lowest point in 1415 years.
In 2023, the affordability index fell even further, reaching an all-time low of 65 for the year.
One consequence was a decline in first-time homebuyers.
Others turned to more affordable housing types, such as condominiums or manufactured homes.
During 20182023, some families upsized into larger homes, while others downsized to smaller ones.
However, the competitive market forced creative decisions.
With limited inventory, some families upsizing had to compromise on location or features.
Others extended their search radius or considered older homes that needed work.
Downsizing Patterns
Many older homeowners or empty nesters chose to downsize.
Baby Boomers became a significant portion of sellers and buyers during this period.
After their children moved out or upon retiring, they often no longer needed a large house.
Many sold their high-maintenance family homes and bought something smaller, such as a condo or a single-level house.
Nationally, buyers over 57 years old were likely to downsize to a smaller home when they moved.
Downsizers faced challenges too.
The shortage of homes wasnt only in the large-home segment; smaller homes and condos were also scarce.
An older homeowner wanting to downsize might sell quickly but then have difficulty finding an affordable smaller home.
Some competed with first-time buyers for the same limited condos or single-story houses.
Others chose to rent after selling, hoping to buy a downsized home when the market cooled.
These prices put many single-family houses out of reach for budget-conscious families.
Those who could afford it went for single-family homes, while others turned to alternatives.
Condominiums and Townhouses
Condos and townhouses became increasingly popular as a next-best option for budget-conscious buyers.
Condos are often cheaper than detached houses in the same area because they are smaller or share walls.
However, by 2022 the median condo price jumped to $345,000 (up 19% from 2021).
So condos went from being an affordable alternative to hot commodities themselves.
More moderate-income buyers purchased condos than before, simply because the single-family market was so competitive.
Manufactured Homes
Manufactured homes also played a role, particularly for lower-income households.
These factory-built homes are typically much less expensive than site-built houses, offering an attainable option for homeownership.
During 20182023, with house prices soaring, interest in manufactured homes likely grew.
Manufactured homes saw price increases too, though not as steep as site-built homes.
Remote work and pandemic-related lifestyle changes led many families to seek second homes in scenic areas.
New Hampshire, with its beautiful lakes, mountains, and rural getaways, became a prime target.
This surge continued into early 2022.
Low mortgage rates and the ability to work from anywhere made owning a getaway more feasible.
For budget-conscious local buyers, this added competition.
Homes that might have been moderate-cost primary residences sometimes got purchased as vacation homes by wealthier buyers.
Certain counties felt this trend strongly.
Additionally, short-term rentals became popular in tourist spots, further encouraging investment purchases.
By 2022, there were about 5,582 short-term rentals active across New Hampshire, heavily concentrated in vacation counties.
In 2018, the average 30-year fixed mortgage rate was about 4.54%.
As 2019 arrived, rates fell to about 3.94%, giving buyers more breathing room.
The Pandemic Rate Drop
The real game-changer came in 2020 and 2021.
In response to the COVID-19 pandemic, the Federal Reserve slashed interest rates, leading to record-low mortgage rates.
Throughout 2021, the average 30-year rate was roughly 2.96%, the lowest annual average on record.
Many buyers rushed to take advantage, knowing this was a rare opportunity.
However, low rates combined with limited inventory also enabled buyers to bid higher prices while keeping payments manageable.
This contributed to bidding wars and rapid price escalation in 20202021.
The 2022 Rate Shock
In 2022, the winds shifted dramatically.
Inflation surged, and the Federal Reserve responded by hiking interest rates rapidly.
This swing priced many buyers out.
By 2023, mortgage rates fluctuated in the mid-6% range, slightly down from late 2022 peaks.
Some buyers turned to adjustable-rate mortgages or interest rate buydowns to ease initial costs.
Regional Differences Across New Hampshire
New Hampshires housing trends varied significantly by region.
Rockingham County, which includes Portsmouth, Salem, and Exeter, consistently ranked as the most expensive.
Nearby Hillsborough County (Manchester and Nashua) also had a high median price around $500,000.
The Seacoast region (eastern Rockingham and parts of Strafford County) was particularly expensive.
Towns like Portsmouth, Hampton, and Rye saw very high prices and often cash buyers.
Budget-conscious buyers rarely could buy in prime Seacoast towns unless they found a small condo or a fixer-upper.
These areas offered something of a middle ground: not cheap, but more attainable than the south.
In 2024, Merrimack Countys median price was around $420,000 and Cheshire around similar or slightly less.
Communities in these areas that were historically affordable saw significant appreciation.
For local year-round residents, finding an affordable home could be tough due to competition with second-home buyers.
However, more remote parts of these counties and less touristy towns still offered comparatively lower prices.
The North Country
The North Country (Coos County) remained the most affordable region.
The challenge there is not high prices, but limited economic opportunities.
Price Trajectories
From 2008 to 2017, New Hampshire home prices were recovering from the Great Recession.
By 2017, the median price was back near the mid-2000s peak about $266,000.
In short, 20082017 saw prices fall and then slowly climb back to normal.
In contrast, 20182023 saw prices surge to entirely new heights, far beyond previous records.
The growth in the late 2010s was already strong, and the early 2020s brought unprecedented spikes.
Months of supply in 2009 was extremely high at one point around 18 months.
This oversupply put buyers in the drivers seat.
By 20162017, the market had tightened considerably, with inventory falling to around 36 months of supply.
Mortgage Rates
In 2008, mortgage rates were about 6%.
Then the Great Recession and Federal Reserve cuts brought them down.
By 20122013, rates hit record lows for that era roughly 3.5%.
They generally stayed historically low (34%) through 20152017.
No one in 20082017 experienced a doubling of mortgage rates in one year like in 2022.
In contrast, 20182023 saw active investors and ordinary buyers often bidding above listing price.
