Low Inventory Leads to Fewer Home Sales and Higher Prices
Sales of detached single-family homes declined for a second consecutive month in March, slipping 3.7 percent on an annual basis, as harsh weather conditions this winter along with an extremely low inventory of homes for sale thwarted enthusiastic buyers and tempered sales activity. This marks the first time in nearly two years that home sales have fallen for two consecutive months on a year-to-year basis – the last time being May and June 2011.
Despite the softening in sales in the past two months, single-family homes actually improved a modest 1.5 percent during the first quarter of 2013 as compared to the first three months of 2012. Additionally, despite the slower sales pace, the 624 detached single-family homes sold last month represents the second highest March sales total in the past six years – topped only by the 648 homes sold in March 2012, and is the twelfth highest sales total on record for the month of March in Greater Boston.
The monthly median selling price for detached single-family homes increased for a sixth consecutive month in March, rising 3.7 percent on an annual basis to $430,100. This marks the first time since June – November 2010 that the single-family median home selling price has risen for six consecutive months. Although last month’s price gain is the smallest percentage increase during the current period of rising selling prices, that’s welcomed news since more modest price increases are what’s necessary to keep the housing market affordable, especially for entry-level buyers.
The inventory of detached single-family homes for sale declined on an annual basis by 41 percent in March, marking the seventeenth time in the past 18 months that the number of homes on the market has declined from the same month one year earlier. There were more than 1,900 fewer homes on the market this March compared to the same month last year, and with just 2,755 homes for sale last month it’s the first time since March 2004 that the inventory of single-family homes in Greater Boston has fallen below 3,000 listings. The last time there was a smaller number of homes for sale was January 2004 when there were 2,626 homes on the market.
Condominium sales rose in March for a fifteenth consecutive month on annual basis, increasing modestly by 2.1 percent from the same month one year ago. A total of 620 condo units were sold in March 2013, which is well off the record sales pace for the month of 897 units sold in March 2007, but still the most for the month in three years, and the sixth highest sales total on record for the month of March in Greater Boston.
Demand for condos remains strong, especially among suburban empty-nesters looking to purchase in Boston, as well as with investors, and renters looking to become first-time homeowners, but a shortage of condominiums for sale has resulted in fewer opportunities to buy and put upward pressure on prices which is holding back even healthier activity. To this point, the March sales gain of 2.1 percent is the smallest percentage increase in sales on an annual basis during the fifteen month period of sales increases. Overall, condo sales improved 11.5 percent in the first quarter of 2013 as compared to the same three-month period one year ago.
After experiencing a modest 5 percent decline in the monthly median selling price for condos in February, the median selling price for condominiums rose sharply in March by 19.7 percent to a new all-time high of $407,000. The nearly 20 percent jump in the median price over the past 12 months is the largest percentage increase in the condo median selling price in nearly 2 ½ years dating back to November 2010 when the median price rose 19.5 percent over the comparable month one year earlier. Notably, the monthly median selling price for condos has declined only twice in the past five quarters, and this past month’s steep gain to a new record high selling price offers evidence of the confidence buyers have in the local housing market, as well as the upward pressure being put on prices dues to strong pent-up demand and a tight supply of units for sale.
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