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Massachusetts’ home sales figures slid downward for yet another month in March, as the state’s housing shortage and rising interest rates continued to bite.
Last month, there were 3,591 single-family home sales in Massachusetts, a 6.9 percent decrease from March 2021 when there were 3,857 transactions according to The Warren Group, publisher of Banker & Tradesman. Meanwhile, the median single-family sale price increased 12 percent on a year-over-year basis to $515,000, up from $460,000 in March 2021 – a new all-time high for the month of March.
“Low inventory continues to plague the real estate market in Massachusetts,” Warren Group CEO Tim Warren said in a statement. “The number of homes for sale has been declining for a decade or more and that trend has led to a lower sales volume and is pushing prices higher. Couple this with rising mortgage rates – which recently hit 5 percent for the first time since 2011 – and housing affordability is rapidly waning. First-time homebuyers are flocking to rural communities and blue-collar cities to take advantage of attractive purchase prices.”
Year-to-date, there have been 9,711 single-family home sales in Massachusetts, a 9.7 percent decrease from the first three months of 2021. Meanwhile, the year-to-date median single-family home price increased 10.9 percent on the same basis to $499,000.
The state is running significantly behind last year’s tally of new single-family listings, according to the Massachusetts Association of Realtors. Only 11,315 homes have hit the market through the first quarter of this year, an 8.5 percent reduction over the first quarter of 2021, the group said. Inventory sat at a mere 3,007 in March, MAR reported, just shy of 30 percent below March 2021’s already-rock-bottom tally.
The state’s major markets are feeling the pinch as more and more sellers are either priced out by rising prices and average mortgage interest rates, which hit 5 percent last week according to Freddie Mac, or put off by the still-tight market.
“One of the biggest challenges for our market is that many homeowners who are thinking about selling have been hesitating, unsure whether they’ll be able to find another home to purchase if they do sell. When that occurs, trade-up activity slows and the entry-level market stalls, which is why first-time buyers are having such a tough go of it,” Melvin Vieira Jr., the 2020 president of the Greater Boston Association of Realtors, said in a statement. “We’re also building fewer and fewer new homes each year. With labor and material costs climbing and supply chain issues causing major delays, new housing construction isn’t going to solve our inventory shortage any time soon.”
In GBAR’s territory, which roughly covers the area within Route 128, plus most of MetroWest, inventory dropped 9 percent year-over-year last month, to 1,036. New listings were off 2 percent for the month on the same basis, at 1,642, and down 7.7 percent for the quarter, to 3,147. Days to off-market still sat at 14 for the quarter, down 12.5 percent from the first quarter of 2021, and showing that most newly listed homes are still getting offers at a frenetic clip. The percent of list price sellers received in March jumped to 106.1 percent from 102.4 percent in March 2021, showing just how widespread bidding wars are in Greater Boston.
On Cape Cod, similar dynamics are at play according to the Cape Cod & Islands Association of Realtors.
At the end of the first quarter, there were 274 single-family homes for sale and 93 condominiums for sale in CCIAOR’s multiple listings service. One year ago, there were 378 single-family homes and 148 condos listed for sale, a 27.5 percent decrease and a 37.2 percent decrease, respectively.
Cumulative days on market for the first quarter of 2022 decreased 52.1 percent for single-family homes year-over-year, dropping from 73 days to 35 days.
“We are seeing the expected decline in total sales brought on by the persistent levels of low inventory over the last two years,” CCIAOR CEO Ryan Castle said in a statement. “What we are watching into the future is how consumers respond to rising interest rates and new rules governing second home loans by Fannie Mae, which might just give cash buyers even more of an upper hand moving forward.”
With the single-family market continuing to see challenges, Warren suggested some buyers could turn to the condominium market. While still setting all-time price records, condos are still cheaper than single-family homes.
“Condo sales took a big hit in March on a year-over-year basis, but activity was actually up 7.5 percent when comparing activity to what we saw in March 2020,” Warren said. “The condo inventory isn’t quite as depleted as the single-family market, so more buyers could turn to condos in the coming months as an alternative to single-family homes.”
MAR reported condo inventory sat at 1,980 statewide in March, 37.3 percent off from the year before. Only 3,014 condos came to market in March, roughly even with March 2021, while the quarterly tally of new listings sat at 6,443, an 8.7 percent decline year-over-year.
There were 1,826 condominium sales in March 2022, according to The Warren Group, compared to 2,268 in March 2021 – a 19.5 percent decrease. Meanwhile, the median sale price increased 4.1 percent on a year-over-year basis to $460,000 – a new all-time high for the month of March.
Year-to-date, there have been 4,490 condo sales, a 17.2 percent decrease from the first three months of 2021 with a median sale price of $450,000, a 5.9 percent increase on the same basis.
