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Home sales activity plunged again in January, new data shows, but an uptick in pending sales has some observers wondering if buyer demand will return this spring stronger than fall’s weak showing.

According to data from the Massachusetts Association of Realtors, 3,005 single-family homes and 1,396 condominiums went under agreement in January, 18 percent and 10.6 percent year-over-year gains, respectively.

“Six percent [average mortgage interest rates] isn’t something that’s scaring away buyers,” said David McCarthy, operating partner at Keller Williams Boston|Metro and the 2023 MAR president.

According to mortgage-buyer Freddie Mac, the average rate on a 30-year, fixed-rate loan began January at 6.48 percent, falling to 6.09 percent for the seen days ending Feb. 2. Since then, rates have crept up to 6.32 percent.

Alison Socha, a Realtor with Leading Edge Real Estate and the 2023 president of the Greater Boston Association of Realtors, said this winter’s relatively mild weather has helped bring more buyers and sellers out. Some agents in her trade group have even shared stories of having five or even 10 offers on properties that are priced appropriately, she said.

But more than a few sellers are still operating with outdated impressions of the real estate market, she warned, based on the hot market of the last few years.

“You have to be careful to not just listen to the numbers or the anecdotal information in isolation,” she said, noting that home sales data showing drops in home sales and rising home prices point in different direction than agents’ anecdotes.

Last month, 2,379 single-family home sales closed statewide, a 32.6 percent decrease from January 2022, and 1,178 closed condo sales, a 27.9 percent drop according to The Warren Group, publisher of Banker & Tradesman. Those figures marked the fewest number of single-family homes sales for the month of January since 2011, and the fewest condo sales for any January since 2015. Meanwhile, the median single-family sale price increased 0.8 percent on a year-over-year basis to $499,000, and the median condo sale price spiked 9.2 percent on a year-over-year basis to $480,500 – both all-time highs for the month of January.

“The lack of inventory in the housing market continued to add upward pressure to the median single-family home price,” Cassidy Norton, The Warren Group’s associate publisher, said in a statement. “The 2,379 single-family home sales marked the fewest number of transactions for the month of January since 2011 and the lack of inventory is mostly to blame. Add in the fact that interest rates are nearly double what they were a year ago and the rising
cost of consumer goods, and we can expect sales numbers to continue their downward trend in the coming months.”

MAR data showed only 2,571 single-family homes and 1,460 condos hit the market last month, 5.8 percent and 6.4 percent year-over-year declines, respectively. With the average number of total days a single-family listing sat on the market jumping 21.1 percent on the same basis to 46 days and the same figure for condos rising 4.3 percent to 49 days, total inventory on the market still fell. Only 3,765 single-families and 1,987 condos were for sale, 8.9 percent and 15.9 percent falls, respectively.

McCarthy said he’s not optimistic about seeing more than a seasonally-driven bump in the number of homes that come on the market this spring – something that, while bad for affordability, will likely continue to support home prices.

“It’s hard to believe we’re suddenly going to have an abundance of property to sell,” he said.

Part of the problem is that, while some sellers may feel unwilling or financially unable to leave their ultra-low mortgage rates behind, they may also believe that there won’t be enough demand for their home if they list, Socha said.

“That general anxiety that was rolling through things in the autumn and early winter market, you keep hearing that inflation is high, prices are going to suffer, buyers are getting nervous – that’s not something that will fill sellers full of confidence,” she said.

If an agent is faced with such a prospective client, McCarthy said, they can turn to data.

“Forty-six [days on market] is still nothing. 46 to a seller should be nothing – it’s not a reason to panic,” he said. “We’re so far away from a balanced market.”

January Sales Show Homebuyers Returning, Observers Say

by James Sanna time to read: 3 min