Massachusetts saw a slight downturn in the number of single-family houses sold last month compared to July 2019, before the COVID-19 pandemic upended the typical market seasonality, leaving some observers to question whether the pool of potential homebuyers has shrunk, and others to conclude the let-up is only temporary.
The month saw 6,327 single-family home sales statewide, according to The Warren Group, publisher of Banker & Tradesman. That’s 1.5 percent fewer than were sold in July 2019.
July closed sales figures typically represent homes that went under contract roughly two months before.
That’s not to say demand had slackened this spring. The median single-family sale price also spiked 17.4 percent on a year-over-year basis to $540,000, up from $460,000 in July 2020 and up 27.1 percent from July 2019 when the median sale price was $425,000. This marked a new all-time high for the median sale price for the month of July and the fourth consecutive month that the median single-family home price has hovered above $500,000, according to The Warren Group.
“When you look at percentage of original price received [among single-family listings], it’s still strong” indicating bidding wars continued at a near-record level, said Steve Medieros, a Keller Williams broker/associate in South Easton and the 2021 president of the Massachusetts Association of Realtors.
That figure, an average of all statewide listings, stood at 105 percent in July, up from 99 percent from one year before but down slightly from June, when it hit a multi-decade high of 105.9 percent according to MAR. And the average single-family listing spent a mere 23 total days on the market in July, an unheard-of number until the buying frenzy of recent months.
But Tim Warren, the data company’s CEO, said in a statement the slide in sales numbers could be an indication of buyers getting priced out or fed up with ever-higher home prices.
“The chickens may have finally come home to roost for Massachusetts homebuyers,” said Tim Warren, CEO of The Warren Group. “Since the start of the third quarter of 2020, it was apparent that based on the flurry of sales, paired with the ever-shrinking inventory of single-family homes across the state, that there it was only a matter of time before we saw sales start to slide on a year-over-year basis.”
Condo Sales Draw Buyers
Another possible factor at play: Some buyers may have shifted their focus to typically-cheaper condominiums.
“There are a lot of people who, as the prices rose, if they were looking at a single-family, they shifted to condos and that’s why you saw the market strengthen,” Medieros said.
There were 2,897 condominium sales in July, a 16.5 percent increase from July 2020 when there were 2,487 condo sales. Compared to June 2019 (2,463 transactions), condo sales were up 17.6 percent. Meanwhile, the median sale price increased 9.3 percent on a year-over-year basis to $470,000 – a new high for the month of July. This also marked the twelfth consecutive month that the median condo price has been above $400,000. Compared to June 2019 ($390,000), the median condo price was up 20.5 percent
“The condo market continues to be a bright spot in the Massachusetts housing market, but I’m curious if this level of activity can be sustained,” Warren said. “Last year COVID concerns held back the condo market as buyers were cautious about multi-unit buildings. This year the buyers have returned, and condos are outperforming single-family homes sales. With the Delta variant now dominant and evidence of the effectiveness of vaccines wearing off, prospective condo buyers may once again turn cautious.”
New Listings Inch Up
Single-family buyers could be in store for a reprieve from the frenzied pace of price appreciation in recent years, as the number of homes for sale slid upwards slightly, to 5,518 statewide. That was in part thanks to 6,340 new single-family listings that came online in July, according to MAR. It’s a continuation of a trend that began last month, when for the first time in many years the number of new listings in June exceeded the number in May, typically when the largest number of listings hit.
“Typically June and July is a bit of a slower time, but the inventory actually has picked up a bit, which is actually a good thing,” Medieros said. “Sellers are a little more confident in putting their homes on the market. They’ve seen enough inventory coming on that they think they can find something.”
Even as mortgage interest rates hover at or around record lows and mitigating the rise in home prices, Medieros said, there was “a little bit less of the frenzy.”
“There’s still activity, they’re still seeing multiple offers, but where you might see 20 [5 months ago] you’re seeing eight” he said.
In Greater Boston, a segment of buyers pulled back from the market after Memorial Day, whether due to summer vacations or market conditions, Greater Boston Association of Realtors President Dino Confalone said in a statement.
“With fewer buyers in the market over the past six to eight weeks, the volume and frequency of multiple offers is down as is the number of bidding wars, and that’s helped relieve some of the upward pressure on prices,” said Confalone, a Realtor with Gibson Sotheby’s International Real Estate. “It remains a seller’s market, but we are starting to see more price adjustments and some inventory is starting to sit on the market a bit longer, especially if it’s not priced properly to comparable properties currently listed or recently sold. Properties should be fairly priced, in excellent condition and have a desirable location to sell quickly, even in this hot market.”
Still, he added, these same buyers are likely to return in the fall.
The effect July’s sales will have on potential sellers’ psychology remains to be seen, Medieros said, with some agents reporting that their buyers and sellers were raising concerns about a possible housing bubble – a possibility he was quick to dispel, pointing to the still-tight market conditions. Demand is expected to return in force this fall provided interest rates hold at or near current levels, he said, with the same demographic factors, like a glut of Millennials entering prime homebuying years, that helped power the homebuying frenzy of the last 18 months still solidly in place.
