The war in Iraq and cold wet winter put a damper on home sales in Massachusetts during the first quarter of 2003, but Realtors are predicting a comeback this spring as new listings come on the market. This Colonial on Oaks Road in Framingham was recently listed for sale for $384,900.

Already 40 days into spring and local Realtors are forecasting that real estate sales, which were dampened during the first quarter by a cold, wet winter and the war in Iraq, will rejuvenate with warmer days just around the corner.

Sales of detached single-family homes in the Bay State slipped 9.3 percent from January through March compared to a year ago, while condominium sales fell a more modest 1 percent during the same period, according to preliminary statistics provided by the Massachusetts Association of Realtors. The inclement weather, the conflict in the Middle East and the sluggish job market all took their toll on home sales in Massachusetts during the first three months of 2003, according to local Realtors.

Real estate agents are hoping that the spring real estate market – which typically begins in mid- to late March and is traditionally the busiest time of year for sales activity as more sellers put their homes on the market and buyers emerge to purchase homes in time to move during the summer months – will bring better news. Yet this year’s spring market has taken longer to emerge and Realtors are blaming the two Ws – weather and war – that played a big role in the real estate market during the first quarter.

“We’re noticing a very late bloom to the spring market. We say it’s because of the war and weather,” said Ann Trudeau, manager of Barrett & Co. in Concord and president-elect of The Realty Guild. “We’re noticing the normal amount of spring activity has begun in April where normally it begins in March.”

Some 8,405 single-family homes were sold during the first quarter of the year, down from 9,269 a year ago, according to preliminary information provided by MAR. Condo sales were down to 2,979 from 3,010 during the first quarter of 2002.

While sales suffered during the first quarter, home prices continued to escalate. The average selling price for single-family homes sold in the first quarter was $353,711 – a 15.2 percent increase from the $307,073 average selling price posted during the same period last year.

Condominium prices were also on the rise during the first three months of the year. The average selling price for condos sold this year jumped 10 percent to $245,734 from $223,338 during the same quarter last year.

“The price increases continue to be a result of the supply and demand issue,” said MAR President Peter P. Casey. “There continue to be many fewer new homes than we need in Massachusetts and many more buyers.”

Casey explained that since about 1995, about 17,500 permits have been issued for new single-family homes and multifamily properties. That’s about 3 permits for every 1,000 people, half the national average which is a little more than 6 permits for every 1,000 people, he said. The permit activity results in far fewer homes than the 40,000 units that economists say are needed on an annual basis in this state, he said.

“The accumulated pent-up demand is growing enormously and that is the primary reason for the huge supply and demand imbalance,” said Casey.

The number of existing homes listed for sale, however, started to inch upward during the first quarter of 2003. The number of homes listed for sale in the state, 34,010, was about12 percent higher than a year ago, according to MAR. Currently, there is about a nine-month supply of homes for sale, whereas during the end of last year the supply stood at between seven and eight months.

An eight- to 10 month-supply of homes is generally considered a more balanced market for seller and buyers, according to Casey.

“That’s a level playing field that we haven’t seen in a while,” he said.

But Casey explained that the factors that may have kept buyers from purchasing homes and the inventory numbers up during the first quarter were all temporary. In 2002, first-quarter sales were in part boosted by the spillover from the Sept. 11, 2001, tragedies. In the months following the terrorist attacks, consumers again started making major purchases they had put off immediately after the attacks – which meant more sales were recorded during the last months of 2001 and the beginning of 2002.

In addition, the winter was much milder in 2002 compared to this year, when the Bay State was hit with several snowstorms that affected the entire state, not just regions that are traditionally affected by severe winter weather, said Casey.

“I suspect that the nine-month inventory will be depleted fairly quickly once the weather gets more reasonable,” said Casey.

‘Back to Life’

The war and the sluggish job market have also hurt the real estate market. “The war is going to be over soon … the weather is going to return to some normalcy and hopefully the job market will improve,” he said.

Casey said he saw a temporary upswing in activity early in the spring when the weather started to get warmer, but as the weather again turned unseasonably cold, the surge in sales fizzled.

In upscale communities like Concord, Lincoln and Carlisle, some real estate agents have already started to see the tide turning. Trudeau, whose office is the 11th busiest in the state in terms of sales volume, said that she’s seeing more homes come on the market and more buyers presenting offers.

“Even the high end, which had pretty much died in the fall, is coming back to life a bit,” she said.

Trudeau said 38 single-family homes were sold in Concord, Lexington and Carlisle through mid-April, down from 53 single-family homes that were sold a year ago. But Trudeau said that it actually took fewer days to sell homes in those towns during the first few months of this year compared to the same period in 2002. It took about 70 days to sell homes this year, about 20 days less than was usual during the prior year.

The average selling price for homes sold in those communities soared to $969,000 from $922,000.

Many of the homes that sold at the beginning of the year in 2002 were houses that were listed the prior year, according to Trudeau, whereas this year buyers purchased more homes that came on the market in 2003, not the year before.

By most Realtors’ accounts, luxury home sales have suffered more in most communities. “From what I can tell, they’re really hurting,” said Nelson Zide of ERA Key Realty Services in Framingham, referring to agents specializing in high-end home sales.

In contrast, sales of moderately priced homes in Boston’s MetroWest suburbs were strong during the first three months of the year, according to Zide. At ERA Key Realty Services, there were 25 to 30 pending home sales for each month during the first quarter, which is consistent with sales activity during those months in prior years, said Zide.

“Listings, I think, are in short supply. Activity is still strong and buyers [are] out there,” he said.

Zide anticipates home sales will continue at a healthy pace this year. “There’s nothing that I’ve been able to read, hear and see on a national or local basis that something’s going to change that,” he said. “It many not be a top year … but I bet you will be in the top five.”

Some economists, including David Lereah, the chief economist for the National Association of Realtors, agree. Lereah predicts that the national unemployment rate will drop and consumer confidence will rise toward the end of this year.

NAR is forecasting 5.5 million existing-home sales in 2003, down slightly from a record of nearly 5.6 million sales in 2002, and 946,000 new home sales, down from a record 976,000 sales the prior year. While sales statistics may trend down slightly from the record pace of 2002, if NAR’s forecast is accurate, 2003 would still rank as one of the best years ever for Realtors.

Aglaia Pikounis may be reached at apikounis@thewarrengroup.com.