The Inventory Floor: Why Housing Supply Isn’t Rising in MA & RI
The Inventory Floor: Why Housing Supply Isn’t Rising (Even When Rates Cool), and Why MA/RI Are Stuck in the Tightest Market Since WWII
We went into 2025 expecting a simple story: Mortgage rates fall → More listings appear → The market loosens up.
But the reality hasn’t followed the script.
Rates eased from the 7s into the mid-6s. Mortgage apps bounced a little. Sentiment improved. Buyers trickled back into the market.
And yet…
Inventory barely moved.
In Massachusetts, it actually fell again.
Rhode Island stayed flat.
And nationally, we hit what economists are now calling the Inventory Floor.
So today’s article starts with one question: Why aren’t listings rising yet?
But as we look under the hood, the topic expands into three deeper questions:
Has the U.S. housing market structurally changed?
Is Massachusetts and Rhode Island’s inventory problem worse than the national picture?
Does lower mortgage rates actually increase inventory — or make it tighter?
Let’s walk through the data and follow the trail wherever it leads.
1. The Big Picture: The U.S. Has Hit an “Inventory Floor” — and It’s Unlike Any Previous Cycle
Historically, inventory behaves like weather — up, down, seasonal, predictable.
But something broke in the 2010s:
Demand surged (millennials hit buying age)
Supply never recovered (builders underbuilt by 3–5 million homes)
Then COVID hit
And rates collapsed to the 2s and 3s**
And nobody wanted to give up their cheap mortgage**
This created the lock-in effect, which you already know…
But here’s where it gets weirder:
Even as mortgage rates fell from the 7s to the mid-6s in late 2024 and 2025, inventory did not meaningfully rise.
Which raises the first strange question:
❓ Shouldn’t falling rates increase listings?
Traditionally yes. In this cycle — no.
Because even at 6.3%, a huge portion of homeowners are still holding:
2.5–3.0% pandemic mortgages
3.25–4.0% pre-pandemic refinances
30-year mortgages they locked in for life
Meaning:
A 6.3% rate does not motivate movement.
It eliminates urgency altogether.
Homeowners are now behaving more like long-term bondholders than participants in a normal housing cycle.
And I’m seeing it in my own business, too. My own client list used to reliably refer me at a rate of 18-25 sales per year, every year. Lately? It’s ⅓ that number… because everyone has a rate below 4% and has no sense of urgency to go to something bigger, which costs more money at a higher interest rate… nobody wants to double their mortgage payment.
Quite frankly, drive around any town and you see more people remodeling their homes… because they’re equity rich and it’s cheaper than selling and buying a new home.
2. MA & RI Are Even Tighter Than the National Market
Here’s the simple data summary:
🧾 Inventory Snapshot (as of latest MLS reports)
United States (NAR):
Active listings: +2% YoY
Months of supply: ~3.3 months
New listings: flat YoY
Massachusetts (MLS PIN):
Active listings: DOWN 6–8% YoY depending on county
Months of supply: 1.3–1.9 months (historically low)
New listings: negative YoY for 29 of the last 34 months
Rhode Island (Statewide MLS):
Active listings: roughly flat YoY
Months of supply: 1.6–2.0 months
New listings: flat or slightly negative
Translation:
When the rest of the U.S. hits a floor, MA and RI hit bedrock.
Our region already had:
Old housing stock
The nation’s highest share of “mortgage-locked” owners
Strong job markets (Boston/Providence)
Restrictive zoning
Chronic building shortages
High build costs
Low land availability
Which all combine to create a reality buyers feel every weekend:
There simply aren’t many homes to buy — and the ones that do hit the market vanish instantly.
3. **Question: Are Baby Boomers the Cause?
Answer: They’re a major part of the equation — but not the whole story.**
MA and RI have some of the oldest populations in the U.S. Traditionally, Boomers downsize in predictable waves around ages 65–75.
But something changed:
They’re working longer
They’re healthier (my mom is in her 70s and is more fit than many in their 50s)
They’re wealthier
Their homes are paid off
Their taxes are lower
Their mortgages are ultra-low
Downsizing inventory doesn’t exist (a real problem that’s locking the move-up buyer market)
Assisted living is too expensive (I know this first-hand from my in-laws)
Their adult children still live nearby
And low rates make them feel “rich on paper”
So instead of downsizing, many simply… stayed put… because they can afford to stay in their larger home and pay for services (landscapers, etc) much cheaper than downsizing to a ranch that needs updates… never mind a 55+ community.
If Boomers move 50% less often than the cohort before them, the entire real estate ecosystem gets squeezed… which is exactly what we’re seeing.
In MA/RI? It gets strangled because we have a much higher population of “seniors”.
4. **Question: Will Lower Rates Increase Inventory or Tighten It?
Answer: Surprisingly — tighter.**
This sounds backward, so let’s unpack it.
When rates drop from 7% → 6%
Buyers return faster than sellers
Demand rises
Inventory drains faster
Days-on-market falls
Prices stabilize or increase
This is exactly what happened in early 2025:
Buyers came back. Sellers did not.
A small dip in rates actually re-tightened the market.
If rates drop into the high-5s?
Demand spikes
Migration picks up
Millennials re-enter
Investors return
The floor tightens further
Low rates = demand shock. Demand shock + no new listings = fierce competition.
This is why the dream that “rates falling will create listings” is flawed.
If anything:
Lower rates crush inventory even more.
I have been telling people this for a while… rates dropping will only make prices accelerate further without a massive increase in inventory… and there’s just too large a gap in the current interest rate from what many home owners already have on their current home to make it worthwhile.
5. **Question: Why Aren’t “Life Events” Creating More Listings?
Answer: They are — but the math for moving doesn’t work anymore.**
People still:
Have kids
Get divorced
Take new jobs
Become empty nesters
Inherit property
Relocate
But each event now triggers a brutal math equation:
“If we sell our 3% mortgage, we’re buying another house at 6.3%.”
“If we rent, rents are up.”
“If we downsize, condos cost just as much.”
“If we move to another county, taxes are higher.”
“If we refinance, payments jump.”
Life events that used to force movement now often force stability.
This is unprecedented in modern housing history.
6. **Question: Does New Construction Solve This?
Answer: No — not in MA/RI.** The caveat being that construction won’t happen in the volume needed or in the municipalities necessary. They could build massive neighborhoods in Berkshire County and it just won’t move the needle. And that’s not because it’s not beautiful out there. It’s just that it’s not where the jobs are.
Even though national homebuilding has improved, the Northeast is a different beast:
Land is scarce
Permitting takes forever
Towns resist density
Labor is expensive
Insurance is rising
Infrastructure approvals lag
Material costs remain high
Over regulation places a stranglehold on builders
New England simply doesn’t build enough — and never has.
In Bristol, Plymouth, Norfolk, Suffolk, and Worcester counties, new construction made up less than 6% of total transactions in 2024–2025.
You cannot fix a structural shortage with 6% new supply.
7. **Question: So When DOES Inventory Rise Again?
Answer: When one of five things happens — none of which are easy.**
Here’s the list:
1. Rates fall dramatically (into the low-5s and stay there)
But that activates buyers faster than sellers → tighter inventory short term.
2. Rates rise dramatically (into the 7s or 8s)
This crushes demand → inventory rises… but it also crushes affordability → bad outcome.
3. Major recession (real one, not a two-month COVID recession)
Job losses force movement → inventory rises… but not the “good” way.
4. Policy changes (zoning reform, ADU liberalization, high-density urban development)
This helps long term but moves painfully slowly in MA.
5. Boomers eventually age out of their homes
This is the decade-long story to watch. Also, refer back to the fact that the Boomer generation is healthier for longer.
8. MA/RI Inventory Floor: The Story in One Simple Table
Google Docs–friendly, no formatting issues:
“Why Inventory Isn’t Rising” — Simple Factors
Mortgage lock-in → 2–4% loans not being traded
Boomer stay-put behavior
High downsize costs
Scarce new construction
Restrictive zoning
High property taxes in alternative towns
Inflation pressure on renovations
High insurance in coastal counties
Rate declines boosting demand faster than supply
Limited buildable land
Slower household formation
9. What This Means for Buyers, Sellers, and Investors in 2025–2026
Buyers
Stop waiting for a “flood of inventory.” There isn’t one coming. You’re better off focusing on:
Off-market opportunities
Price-reduced listings
Homes needing updates (this is where I can be VERY helpful as a licensed builder)
Smaller towns with better supply ratios
Sellers
You are still in control.
If you list a well-priced home in a good area, you will get:
Strong showing activity
Faster offers
Limited competition
Seasonal advantage in winter
Investors
Inventory scarcity keeps rents strong. Cash flow depends on debt cost — not supply. Your underwriting should assume:
6–6.5% rates
Flat inventory
Tight competition for good assets
Everyone
Don’t plan your life around inventory magically appearing. Plan around the market we actually have — not the one we remember.
Read that again.
10. Bottom Line: The Inventory Floor Is Real — and It Isn’t Moving Anytime Soon
The Northeast didn’t just hit a floor. We hit a foundation.
Until the structural math changes — or demographics force movement — inventory in MA and RI will remain painfully tight.
Falling rates do not fix this. New construction doesn’t fix this. Seasonality doesn’t fix this. Forecasts don’t fix this.
Only time and structural policy change do.
And in the meantime?
The smart move is to work the market we’re in — not the one we wish we had.
🧾 REFERENCES:
Altos Research. (2025). Weekly Market Data — Active Inventory & Price Reductions.
https://www.altosresearch.com
Federal Reserve Bank of St. Louis. (2024–2025). St. Louis Fed Economic Data (FRED): Housing Inventory; 30-Year Mortgage Rates; Months of Supply; New Privately-Owned Housing Units.
https://fred.stlouisfed.org
Fannie Mae. (2025). Economic & Housing Outlook (September 2025 Update).
https://www.fanniemae.com/research-and-insights/forecast
Mortgage Bankers Association. (2025). MBA Mortgage Finance Forecast (Q4 2025).
https://www.mba.org/news-research/research-and-economics
National Association of Realtors. (2025). Existing Home Sales; Housing Inventory Data; Buyer & Seller Trends Report.
https://www.nar.realtor/research-and-statistics
National Association of Home Builders. (2025). Housing Market Index; Regional Builder Confidence Reports.
https://www.nahb.org/news-and-economics/housing-economics
Redfin Research. (2024–2025). Homeowner Mortgage Rates & Lock-In Effect Analysis.
https://www.redfin.com/news/data-center
Zillow Research. (2025). Housing Market Indicators: New Listings, Inventory, Days on Market.
https://www.zillow.com/research
MLS Property Information Network (MLS PIN). (2025). Monthly Market Reports for Massachusetts.
https://www.mlspin.com (Reports via subscription; summary data publicly released to member brokerages)
Statewide MLS (Rhode Island). (2025). Residential Market Activity Reports.
https://www.riliving.com (Market stats released publicly each month)
Joint Center for Housing Studies of Harvard University. (2024). The State of the Nation’s Housing 2024: Underbuilding & Demographic Forces.
https://www.jchs.harvard.edu
U.S. Census Bureau. (2024–2025). Household Formation, Homeownership Rates, and New Construction Data.
https://www.census.gov/housing
Federal Reserve Board. (2025). Monetary Policy Report — Labor Market, Inflation Drivers, and Housing Impacts.
https://www.federalreserve.gov/monetarypolicy.htm
Bureau of Labor Statistics. (2025). Employment Situation Summary, Wage Growth, and Demographic Employment Patterns.
https://www.bls.gov
National Bureau of Economic Research. (2020). US Business Cycle Dating Committee — Recession Determination for 2020.
https://www.nber.org/research/business-cycle-dating
Freddie Mac. (2025). Primary Mortgage Market Survey (PMMS).
https://www.freddiemac.com/pmms
Realtor.com Research. (2025). New Listings Trend & Inventory Analysis.
https://www.realtor.com/research
Ocearch. (2024). North Atlantic Shark Migration Patterns.
https://www.ocearch.org
