Hopes for real estate revival wilt
Single-family home sales drop by up to 9% in May, cap disappointing spring
Maybe next spring.
With the key selling season for the real estate market nearing an end, the hoped-for rebound in Massachusetts home sales hasn't materialized. Sales of single-family homes fell by as much as 9 percent in May from a year ago, accelerating from modest declines in April, according to data released yesterday.
"There were a lot of high hopes pinned on this spring season," said Terry Egan, editor in chief of publications at real estate data publisher Warren Group, "but these numbers tell us the longed-for recovery isn't here yet."
Yesterday Warren Group reported that over the first five months of 2007, single-family home sales are down 3 percent from the same period of 2006. Separately, the Massachusetts Association of Realtors reported a more modest decline of 1 percent for the same five-month period .
The Realtors association only tracks homes that are sold through real estate a gents, while Warren Group totals a larger pool of transactions that includes properties sold directly by owners.
Both groups said single-family home sales fell sharply in the month of May alone, with the Realtors reporting a 7.5 percent decline from a year ago and Warren Group a 9.1 percent drop.
But they again diverged on the impact of the slow market on prices. The real estate brokers group said the median price for a single-family home actually increased a tiny amount, 0.70 percent, from a year ago, to $355,000 from $352,700 .
Warren Group, meanwhile, said the median price tumbled 4.6 percent to $315,000 from $330,000.
Egan said it's unclear what caused the difference, but data can fluctuate from month-to-month. Over the longer term, however, the data from both groups tends to track along similar lines, he said.
Ronn Huth, a buyer's broker at Buyer's Choice Realty in Wenham, said sales on the North Shore remain slow. Homes that sell are going for about 92 percent of original asking prices, he said. In one recent sale, Huth added, the seller probably lost money after paying commission and expenses.
"I feel bad for owners like that," he said. "But buyers are getting some awfully good deals."
However, the lower prices have sparked an increase in sales in pockets around the state, generally in the suburbs close to Boston, such as Arlington and Brookline. Some sellers in these communities have reported multiple offers and even bidding wars on their properties.
The Realtors' data also depicted a stronger condominium market. The association said Massachusetts condo sales rose 0.20 percent from a year ago, and the median price increased 1.4 percent to $290,000. Warren Group said statewide condo sales fell 2 percent and the median price fell 3.5 percent to $275,000.
Either way, analysts yesterday said the Massachusetts housing market will likely continue to weaken before it begins to rebound. Gus Faucher, who follows the Massachusetts economy at Moody's Economy.com, a West Chester, Pa., forecasting firm, said prices here would still be dropping into the first half of next year.
Inventories, while shrinking recently, remain high, Faucher said. Meanwhile, rising mortgage rates and tighter credit standards are reducing the number of buyers, dampening demand. Mortgage rates have risen more than a half-point since early May, according to Freddie Mac, the government-created mortgage investor.
"The housing market is still soft," Faucher said, "and it's going to remain soft."
Doug Azarian, president of the Massachusetts Association of Realtors, said the spring market has been disappointing, but contended that there are signs it is moving closer to a turnaround. In addition to the stabilizing or slightly higher prices that his organization reported, inventories are shrinking.
In May, Massachusetts had an 8.9-month supply of properties, down from 10.8 months a year earlier. Realtors say a supply of about 7.5 months represents a market balanced between buyers and sellers.
"I'm optimistic that inventories are coming down," Azarian said. "The spring market was not as strong as we had hoped, but we are making progress in bringing supply and demand into balance."
Earlier this week, the National Association of Realtors reported the inventory of existing homes is at its highest level since the end of the housing bust of the late 1980s and early '90s.
Single-family home sales fell slightly in May and the median price dipped 2.1 percent from a year ago, the National Association of Realtors said. Yesterday, the Commerce Department reported that new home sales have plunged nearly 16 percent in the past year.
Robert Gavin can be reached at email@example.com.