While its housing market is driven by different dynamics than the rest of Massachusetts, Cape Cod is seeing a rising tide of new listings that’s brought new inventory to market this spring. iStock photo illustration

The Cape Cod housing market has seen a surprising bump in new home listings, kindling hope that the era of ever-declining inventory might be coming to a close – at least in Barnstable County.

For the past two months, new single-family listings have noticeably increased in Barnstable County, while much of the rest of the state has continued to struggle with decreasing numbers of homes for sale.

In April, new listings were up 20.3 percent in Barnstable County compared to the year prior – and new listings were up 20 percent year-to-date compared to the first four months of 2023, according to data from the Cape Cod & Islands Association of Realtors.

Meanwhile, pending and closed single-family sales in Barnstable County were up 18.1 percent and 2.8 percent, respectively, in April, compared to the year prior. Year-to-date pending sales were up 9.4 percent compared to 2023, as well.

Similar monthly and year-to-date numbers for pending sales and new listings were reported in March.

Redfin reports similar single-family stats for Barnstable County so far this spring.

As for the much-smaller condominium market on the Cape, the picture isn’t as encouraging, with pending sales, as well as new listings, down in April. But new condo listings were still up 9.2 percent year-to-date, according to CCIAOR’s March data.

The Greater Boston Real Estate Board hasn’t posted its April numbers yet, but its March new-listing numbers stand in contrast to those on the Cape. Greater Boston’s new single-family listings were down 21.6 percent in March, while year-to-date listings were off 0.3 percent.

Hope for a Change

Real estate industry figures stress that the Cape’s comparatively positive supply numbers, while welcome, are nevertheless coming off record-low listings and overall inventory, making any increases appear more significant than maybe they really are.

Also, they stress the Cape has a completely different housing market compared to the rest of Massachusetts, serving a more elderly and affluent clientele determined to achieve their vacation and/or retirement real-estate goals.

“The Cape is a unique place that’s immune to market forces elsewhere,” said Todd Machnik, a broker and president of Today Real Estate, which has four offices on the Cape and one on Martha’s Vineyard. “If people really want something on the Cape, they tend to get it.”

Despite these caveats, some Cape real estate experts nevertheless hope that the recent listing trend is a sign of an improving market on the supply front.

“I don’t know what’s causing it, but something seems to be breaking the cycle” of ever-declining inventory on the Cape, said Ryan Castle, chief executive officer of CCIAOR. “We starting to see cracks in the market, a beginning of a thaw.”

Some Can’t Wait Any Longer

Katie Clancy, a sales vice president at William Raveis Real Estate on the Cape, thinks she knows part of the reason for the recent jump in new listings in Barnstable County: Some people simply can’t wait any longer to sell.

Since interest rates started to rise in early 2023, many potential sellers across the country, not just on the Cape, balked at putting their homes up for sale if it meant buying an alternative home with significantly higher mortgage rates.

Meanwhile, many potential sellers also feared not finding an alternative home to buy, amid high demand and fierce competitive to purchase houses that do come on the market.

But Clancy says she knows of two examples of elderly homeowners on the Cape concluding they just couldn’t wait any longer to sell. As a result, they recently sold their homes and moved into assisted living facilities, rather than buying a smaller downsized home on the Cape.

“People were waiting for rates to change but they didn’t,” Clancy said. “People finally understood it wasn’t worth waiting. At a certain point, they run out of choices and have to make a decision.”

A national-level analysis of Home Mortgage Disclosure Act data by economists from Redfin found that Americans took out 40 percent fewer mortgages on second homes last year compared to the year before, and 65 percent fewer than the peak of the pandemic vacation home-buying craze in 2021.

Redfin’s economists also analyzed mortgage rate-lock information – essentially a measure of buyers getting pre-approved for a loan – from real estate data firm Optimal Blue and found that mortgage rate-locks for second-home loans were down 7.3 percent last month on a year-over-year basis, compared to a mere 1.3 percent drop for primary-home loans.

Redfin analysts attribute both declines to the rising cost of vacation homes, a 2022 increase in loan fees for second homes, increasing economic worries causing some buyers to skip on purchasing a second home, the return of in-office mandates at many white-collar companies and a cooling in the market for short-term rentals in many vacation destinations, which would deter buyers who primarily intend to use their second homes as a source of rental income.

Not Everything’s Looking Up

The Cape market in general seems to be returning to a “pre-pandemic rhythm,” in which home-selling patterns are tied to seasonal changes, not necessarily public-health and interest-rate changes, she said.

Overall, the Cape’s spring market so far this year is “encouraging,” Clancy said.

But that’s not to say everything is hunky-dory.

Clancy said lack of new housing is still the main problem facing the Cape market – as well as the Massachusetts market in general. And that overall lack of housing, mixed with continued high demand for homes, will continue to drive prices upwards.

The median year-to-date price for a single-family home in Barnstable County was up 4.2 percent in April, to $725,000, compared to 2023, according to CCIAOR data.

“Until we build more housing, this will remain a seller’s market,” she said.

Rising Number of Sales Falling Through

There are other curious developments, if not worrying signs, in the Cape market.

Castle said the number of people pulling out of contracts – referred to as “falters” – has been on the rise of late.

In the first full week of May, there were 20 recorded “falters,” or deals under agreement at the start of a week unraveling by the end of the week, he said. At the same time last year, there were zero falters.

Besides buyers running into last-minute loan problems, one explanation for the rise in falters: delayed buyer regret over agreed-upon high prices for perceived lower-quality homes.

Meanwhile, some sellers on the Cape are still asking too much for homes, leading to later price reductions – despite generally strong demand for homes on the Cape, Castle said.

Machnik said he’s both impressed and not impressed with the recent rise in new listings on the Cape.

“It’s progress – and that’s great,” he said. “But it’s not enough. It’s still not a healthy market. Demand is very high and there are still multiple offers for homes. And most people still won’t sell if they can’t find alternative homes. We need more housing.”