The lean residential real estate market in New Hampshire has had a dual effect on the state budget — less revenue from the Real Estate Transfer Tax but more revenue from property taxes as homes are being assessed and taxed at higher values.
A review of the unaudited State Fiscal Year 2024 revenue shows that the tax on real estate transfers was $183.7 million, 10.6% less than what was generated in FY 2023. Meanwhile, state property tax revenue was $363.8 million in FY 2024 compared to $263.1 million the previous fiscal year, a 38.3% increase.
Not only are homes for sale harder to find in as tight a real estate market as New Hampshire, resulting in fewer transfer taxes, but existing homes become more valuable and thus are assessed at higher taxable value by municipalities.
Any given property in the Granite State — residential or commercial — can pay up to four different real estate taxes: a county tax, a town tax, a local school tax and the state education tax. The statewide education property tax is known as SWEPT, and it imposes a set percentage tax on every property in the state. Cities and towns collect the statewide tax on top of any local property tax.
In the town of Durham, for example, SWEPT made up 6.8% of the 2023 tax rate. In Londonderry, it was 7.9%. In the city of Manchester, it was 8.06%.
“If you look at a longer time horizon, the real estate transfer tax has been a significant source of revenue growth over the last 10 years, until about the last two years or so,” said Phil Sletten, research director at the New Hampshire Fiscal Policy Institute.
“Then we started to see real estate transfer tax revenues peak and decline substantially,” Sletten added. “Real Estate Transfer Tax revenues depend on the sale price and the number of sales. It is a tax on the transaction, and if there are fewer transactions, even if they’re at higher prices, that’s going to put downward pressure on revenue growth.”
New Hampshire Association of Realtors (NHAR) data bears this out.
Since 2011, except for a couple of soft spots in 2014 and 2018, the number of single-family homes that sold was on the increase. But it turned downward dramatically in 2022 with a 17.9% drop in sales, then dropped more dramatically in 2023 with a 19.1% drop in sales.
NH Sales for single-family homes 2011-2023
| YEAR | UNITS SOLD | % CHANGE | MEDIAN PRICE |
| 2011 | 10,722 | 1.8 | $201,700 |
| 2012 | 12,961 | 20.1 | $202,000 |
| 2013 | 14,267 | 10.1 | $220,000 |
| 2014 | 14,215 | (0.3) | $227,500 |
| 2015 | 16,159 | 13.6 | $241,500 |
| 2016 | 17,623 | 9.1 | $249,800 |
| 2017 | 17,783 | 0.9 | $266,000 |
| 2018 | 17,555 | (1.3) | $283,000 |
| 2019 | 17,639 | 0.5 | $300,000 |
| 2020 | 18,474 | 4.7 | $335,000 |
| 2021 | 17,483 | (5.4) | $395,000 |
| 2022 | 14,360 | (17.9) | $440,000 |
| 2023 | 11,620 | (19.1) |
$470,000 |
Meanwhile over the years, the median price more than doubled.
That, combined with higher mortgage interest rates, has put a strain on affordability, which, according to Sletten, puts pressure on the number of sales which then puts pressure on revenue from the Real Estate Transfer Tax.
“We saw real estate transfer tax revenues have a substantial reduction as a result of that,” said Sletten. “After you adjust for inflation, the real estate transfer tax is bringing in about as much revenue as it did in calendar year 2018.”
The future of the Real Estate Revenue Tax revenue is largely dependent on the overall economy.
“The real estate transfer tax is reflective of a key component of the New Hampshire economy, and does more closely follow broader economic trends than, for example, some of these other revenue sources,” said Sletten.
As a percentage of all revenue in FY 2024, business taxes made up 36.7%, while the sin taxes on wine, liquor, beer, tobacco and gambling made up 15.5%. The state property tax made up 10.9% and the Real Estate Transfer Tax was 5.5% of all tax revenue. The meals and rental tax was 9.9%.
“The real estate transfer tax is more cyclical, in a way that moves more with the cycles of the economy overall than some of the other revenue sources are,” said Sletten.
On the other side of the revenue coin are the higher property taxes that are going to the state.
The state of New Hampshire is among the states with the highest property taxes.
BelongHome.com lists New Hampshire as fourth highest as of March 2024, with an average effective tax rate of 2.09%. The annual taxes on a median-priced home average out to $6,235.
Only Connecticut, Illinois and New Jersey have higher rates, according to the BelongHome.com data.
This continues to strain overall affordability of residential property in the Granite State.
“Our November stats show that affordability is not improving,” said Joanie McIntire, president of the NHAR. “The median sales price for November is $500,000, unchanged from October but 11% higher than November 2023 and the largest monthly year-over-year increase since May. Slightly better news is the number of homes for sale was up 8%. Unfortunately looking back just five years to November 2019, there were 4,324 homes for sale as compared to 1970 this November. “
Housing — its availability and affordability — will likely be a key topic of legislation and discussion as the New Hampshire Legislature organizes for its 2025 session.
The NHAR, as it did in 2024, will continue to press in 2025 for an easing of zoning restrictions to better accommodate new construction, particularly more affordable housing.
McIntire cited statistics that showed the state was short 23,500 housing units versus the need last year. If the trend for demand continues, she noted, 60,000 units will be needed by 2030 and 90,000 units will be needed by 2040.
“This means that, more than ever, we need new homes to the market, new homes in any form — modular, condos, single- and multi-family homes,” said McIntire, an associate broker at Coldwell Banker J. Hempe Associates in Concord. “Changes to the restrictive zoning seen throughout the state will go a long way to improve affordability. Allowing three homes on a three-acre lot will significantly cut costs, which can be past on to the buyers.”
A piece of legislation that was floated in 2024 — allowing by right two accessory dwelling units on a property instead of one — passed in the House but was killed in the Senate. It will be resurrected for renewed consideration in 2025.
As new property tax rates are set in New Hampshire cities and towns, media reports from around the state chronicle how upset some homeowners are about their higher assessed values.
In Exeter, for example, property values rose an average of 55%. Commercial properties increased by 35%, residential by 61%, condos by 61%, vacant land by 61%, and manufactured homes by 146%, per reporting by Seacoastonline.
“The real estate market on the Seacoast, and in Exeter, has changed significantly since the last revaluation in 2019,” Exeter Finance Director Corey Stevens told Seacoastonline. “Market values have increased dramatically during that time.”
