Record Low Inventory Leads to Fewer Home and Condo Sales in February
Sales of detached single-family homes declined on an annual basis in February, sliding 5.2 percent (or 22 units) over the same month last year to 403 homes sold in February 2014. This is the second consecutive month and third time in the past four months sales volume has decreased on a year-over-year basis. In addition, the 403 homes sold last month is the lowest home sales total for February in the past three years. Meanwhile, on a month-to-month basis, sales also fell by 28.8 percent from an upwardly revised 566 homes sold in January.
The slower sales pace can be attributed today’s record low inventory level of homes for sale, higher home prices which have reduced housing affordability levels over the past year, and severe winter weather dating back to mid-December, all of which have hampered buyers in their home search in recent months.
The monthly median selling price for detached single-family homes increased for a seventeenth consecutive month in February, climbing 11.4 percent on an annual basis to $478,900. It’s the first time since August 2004 – December 2005 that the single-family median home selling price has risen for such an extended period. Additionally, last month’s median selling price sets a new all-time high for February, eclipsing the previous record high median selling price for the month set in February 2005 when the median price of homes sold was $452,500.
The current period of prolonged home price appreciation reflects the upward pressure being put on home prices as buyers compete for a limited supply of homes for sale. In fact, February marks the twelfth consecutive month in which the ratio of original listing price to sales price received by sellers has stood at or above 95 percent.
Condominium sales also eased in February, decreasing a modest 4.4 percent (or 19 units) on an annual basis to 416 units closed in February 2014. Despite the decline in sales activity over the past 12 months, it was the second best February sales total in the past six years and is the seventh highest February sales total on record in Greater Boston. As was the case in the detached single-family home market, sales activity also fell on a month-to-month basis, decreasing 20.6 percent from an upwardly revised 524 condos sold in January.
The median selling price for condominiums rose steadily on an annual basis for an twelfth consecutive month in February, increasing 14.3 percent over the past year to a new record high median price for February of $400,000. That tops the previous high median price for the month set in February 2012, when the median selling price was $370,000.
The last time the median selling price for condos rose for 12 straight months on a year-to-year basis was January – December 2005. Meanwhile, the rate of appreciation in the median selling price for February is the largest percentage increase in the monthly median selling price in 13 months, dating back to last February when the median price climbed nearly 20 percent from February 2012.
Similar to the detached home market, the condo market also has been plagued by a lack of listings over the past couple of years and the excess demand is causing much of the rapid run up in prices of late. Additionally, demand for luxury condos in Boston and Cambridge continues to grow, with sales of high-end units priced at $1 million climbing 47 percent over the past 12 months (47 in February 2014 vs. 32 in February 2013), and that’s helping to drive up the median selling price as well.
To access monthly data by community, check out our Local Market Update reports, and our Monthly Market Indicator Reports for a comprehensive overview of Greater Boston housing market data for February.