Sales of detached single-family homes in Massachusetts eased in the third quarter from last year’s record sales pace, but remained at a historically high level, while condominium sales continued to climb sharply this summer to an all-time quarterly high, according to data issued by the Massachusetts Association of Realtors.
The MAR report shows that sales of detached single-family homes declined 2.4 percent across the Bay State in the three months from July-September 2005, slipping from a record high of 15,705 homes sold in the third quarter of 2004 to 15,324 in the same quarter this year. Despite the modest decline in activity, the 2005 third-quarter sales volume is the second highest on record for one quarter in state history.
Meanwhile, condominium sales soared to a new high this summer, increasing 14.4 percent from 6,228 condos sold in the third quarter last year to 7,124 in third-quarter 2005. It’s the second consecutive quarter condo sales set a record, eclipsing the prior mark of 6,832 condos sold in second-quarter 2005.
“While homes are not selling quite as quickly as they were a year ago, demand has remained relatively steady due to strong market fundamentals,” said MAR President Maggie Tomkiewicz of M. Macdonald Real Estate in Dartmouth.
Among the factors helping to keep buyers’ confidence high are modest job and income growth, a wider selection of homes for sale, and attractive mortgage rates, which averaged less than 6 percent in the third quarter at 5.95 percent for a 30-year fixed-rate loan in Massachusetts.
Regionally, sales of detached single-family homes softened in all areas of the state except western Massachusetts, where activity improved 8.3 percent over year-ago levels. Home sales were essentially flat in central Mass. (Worcester County) during the third quarter, slipping just 0.5 percent; however, both greater Boston and the Northeast region saw a modest 2 percent decline in sales, with even larger decreases of 6 percent-13 percent occurring from the South Shore to Cape Cod.
Conversely, condominium sales rose in all seven regions of the state during the third quarter. On the South Shore and Cape Cod, the condo market experienced modest gains of 1 percent-3 percent, but elsewhere sales were up sharply from greater Boston to Berkshire County. The largest sales gains occurred in greater Boston, western Mass. and the Greater New Bedford-Fall River areas, where sales improved 18.4 percent, 25.6 percent and 38.6 percent, respectively, over year ago levels.
“In many areas of the state, the single-family housing market may have already reached its peak, but condo sales have continued to climb, largely because of affordability factors, a surge in the number of newly constructed units, and their wide appeal to active seniors, entry-level and second-home buyers,” observed Tomkiewicz.
“As the current housing boom comes to an end, we can expect a transition to a more balanced market in the months ahead,” said Tomkiewicz. “Historically speaking, we’re still experiencing an active market with plenty of ready, willing and able buyers,” she noted, “but with mortgage rates still low and the number of homes for sale on the rise they’re being patient. With no immediate sense of urgency among buyers, the market has started to assume a more normal sales pace.”
Illustrative of the more relaxed sales pace is the sharp increase in the inventory of homes for sale across the Bay State. Since last summer, the number of single-family properties (detached homes and condos) on the market has grown 31 percent, from a monthly average of 40,957 listings in the third quarter of 2004 to 53,690 in the comparable quarter this year. At the current sales pace, this represents 7.2 months of supply, up from 5.6 months of supply in the third quarter last year.
Today’s healthier supply level has helped to provide buyers with a wider selection of homes to choose from and also relieved much of the upward pressure on prices. The statewide median selling price for detached single-family homes increased 5.7 percent, from $350,000 in the third quarter last year to $370,000 in third-quarter 2005, and the statewide median selling price for condos rose 5.3 percent, from $267,850 in the 2004 summer quarter to $282,000 in the same three-month period this year. These represent the smallest price gains in nearly seven years, dating back to the final quarter of 1998 when detached home prices rose 5.6 percent and condo prices declined 0.2 percent from one year earlier.
“There’s a lot more product on the market today than there was six or 12 months ago, and that’s allowing prices to appreciate at a more modest rate,” stated Tomkiewicz. “The days of multiple offers and bids above asking price are all but over. Buyers have done their homework and they know when a property is overpriced. If you want to sell your home in a timely fashion it must be priced competitively at the time it is listed and be in good to move-in condition,” she explained.
Regionally, in the third quarter, median selling prices for detached single-family homes rose in all seven market areas of the state from year-ago levels. Median prices increased 4 percent-5 percent on Cape Cod and in greater Boston and southeastern Massachusetts, 6 percent-6.5 percent in the Central, Northeast and South Shore regions, and 13 percent in western Mass. Additionally, in the condominium market, price increases occurred in every region except the Greater New Bedford-Fall River area. Third-quarter price gains ranged from 1 percent in greater Boston to 16 percent in western Mass.
Sales and price data from the MAR report reflect transactions occurring through Realtor-affiliated multiple listing services in the commonwealth, and account for approximately 80 percent of all real estate sales in Massachusetts.
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