Home Buying

Report is predicting a return to normalcy in Boston, US home markets next year

Prices are projected to rise 5.7 percent, with an increase in home sales of 7 percent. Search the latest listings to rent or buy at realestate.boston.com.

Prices are projected to rise 5.7 percent, with an increase in home sales of 7 percent. Adobe Stock

A lack of inventory and the upheaval of the COVID-19 pandemic created an unusual year for Boston’s real estate market, but according to a forecast for 2021, the next year will bring a return to normalcy. But that doesn’t mean Boston’s red-hot real estate industry will slow down anytime soon.

Like the rest of the country, Boston will continue to be a seller’s market, with home prices growing an estimated 5.7 percent next year, according to realtor.com’s 2021 Housing Forecast. But that jump in prices won’t stop sales; they’re predicted to increase by 5.4 percent. Those data points are similar to those predicted for the rest of the United States, where prices are projected to rise 5.7 percent, with an increase in home sales of 7 percent.


While buyers in the Boston area will continue to struggle with affordability next year, the increased number of homes on the market in Boston and beyond will provide more options for potential buyers, the report projects. Mortgage rates, however, are expected to increase as well, climbing as high as 3.4 percent by year’s end.

“The 2021 housing market will be much more ‘normal’ than the wild swings we saw in 2020,” said Danielle Hale, the website’s chief economist. “Buyers may finally have a better selection of homes to choose from later in the year, but will face a renewed challenge of affordability as prices stay high and mortgage rates rise.”

Millennials are expected to continue to drive the market in 2021 as they “trade up,” while Gen-Z buyers, the oldest members of which will turn 24 in 2021, will also step onto the playing field as first-time buyers.

“With less cash and no home equity, millennial and Gen Z first-time buyers will be impacted the most by rising home prices and interest rates,” Hale continued. “While waiting until the fall or winter months of 2021 may mean more home options to choose from, buyers who can find a home to buy earlier in the year will likely see lower prices and mortgage rates.”


The COVID-19 pandemic threw a monkey wrench into the 2020 market, and its influence will still be impactful in 2021. The website predicts that sales could be better than expected, depending on the containment of the virus. If we see further lockdowns and quarantines, housing inventory and sales may slow down. The distribution of a vaccine will also come into play. If it’s done quickly, it could lead to increased sales, as well as rising home prices and inventory.

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