The Massachusetts housing market posted its most active second quarter ever this year as economic expansion, rising consumer confidence and a spike in interest rates in the second quarter fueled strong buyer demand and record sales of both detached single-family homes and condominiums, according to data issued by the Massachusetts Association of Realtors.
Prospective home buyers also were drawn to the market by the largest supply of listings in six years, but that did little to ease the pressure on home prices, which rose for a 44th consecutive quarter, the association reported.
The MAR report found that during the second quarter sales of detached single-family home increased 19.5 percent over year-ago levels, from 12,548 units closed in the three months from April-June 2003 to 15,000 in the same period this year. In addition, condominium sales rose 35.8 percent during the second quarter, improving from 4,356 units closed in the second quarter last year to 5,916 in the comparable quarter of 2004. This year’s second-quarter sales volume for detached homes and condominiums represent new records for the spring quarter, and mark the third consecutive quarter sales activity has improved over year-earlier levels. The previous second-quarter sales record for single-family homes was 14,539 from April-June 1999, while the prior high for condo sales was set just last year when 4,356 units sold in the second quarter.
“This year’s spring market occurred just as the economy started adding jobs, and that stimulant, along with near-record-low mortgage rates in the first quarter, gave consumers the confidence to go out and purchase homes,” stated MAR President Judy Moore, of RE/MAX Premier Properties in Lexington.
This year’s relatively mild winter also provided a lift to the market, said Moore, as many sellers put their homes up for sale earlier in the year than is typical, prompting an early start to the spring market. Additionally, a nearly half-point rise in mortgage rates during April offered additional incentive to would-be buyers, as higher interest rates can further limit one’s ability to buy a home, especially those looking to purchase entry-level properties, the MAR president said.
“Whenever mortgage rates rise, as they did last quarter, it tends to motivate buyers to move more quickly, and that can provide a short-term boost to the market, which is exactly what happened this spring,” Moore said. “Even though the spike in interest rates this spring was acute, it was temporary, so it did little to dampen enthusiasm in the market.”
Regionally, during the second quarter, sales of detached single-family homes improved in all seven markets of the state compared to the spring quarter of 2003, with the most significant sales increases occurring in Worcester County, greater Boston, and southeastern Massachusetts, where sales rose 20 percent to 30 percent over year-ago levels. Healthy sales gains of 17 percent to 18 percent also were observed in the Northeast, South Shore and West regions. Most regions also saw strong activity in the condo market this spring, with sales up 14.6 percent on Cape Cod, 28.2 percent on the South Shore, 35.9 percent in the Northeast region, 38.7 percent in central Mass., and 46.6 percent in greater Boston from the second quarter of 2003. Sales also rose modestly in the greater Fall River-New Bedford area, but fell nearly 15 percent in western Massachusetts.
Notably, in most parts of the state, those entering the housing market this spring found increased home-buying opportunities in the form of more listings. In fact, the inventory of homes for sale hit a six-year high for the second quarter this spring, as single-family listings (detached homes and condos) rose modestly by 1.8 percent this past year from a monthly average of 41,247 in the second quarter of 2003 to 42,004 in the same quarter this year. Even more significantly, listings have increased 29 percent, or nearly 10,000 units, since the 2002 second quarter, and are at their highest level since the spring of 1998 when an average of 42,175 detached single-family homes and condos were listed for sale in Massachusetts.
While prospective home buyers are finding a larger selection of homes on the market from which to choose, those with homes to sell do not appear to have suffered as a result. Data from the MAR report shows selling prices continued to rise steadily throughout the state this spring. In the detached single-family home market, the statewide median selling price increased 12.5 percent, from a median price of $305,000 in the second quarter of 2003 to $343,150 in the comparable quarter this year. In addition, the statewide median selling price for condominiums rose 13.1 percent, from median price of $229,900 in the spring quarter a year ago to $260,000 from April-June 2004.
Every region of the state also reported positive price gains between the second quarters of 2003 and 2004. Median selling prices for detached single-family homes rose 9 percent to 10 percent in both Barnstable and Worcester counties and the Northeast region, 13 percent to 16 percent in the greater Boston, Southeast and South Shore regions, and nearly 20 percent in western Massachusetts. Healthy price appreciation also was observed in the condo market, where median selling prices climbed 5 percent to 8 percent in greater Boston and central Mass.; 10 percent to 15 percent in the Northeast, South Shore and West regions; and as much as 25 percent or more in southeastern Massachusetts and on Cape Cod.
The data for this report reflects residential sales reported to Realtor-affiliated multiple listing services systems in Massachusetts, including the MLS Property Information Network Inc.; the Multiple Listing Service of the Berkshire County Board of Realtors; Cape Cod & Islands Multiple Listing Service Inc.; the North Bristol County Board of Realtors MLS; and Southeastern Mass. MLS.
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