Sales of Homes, Condos Soften as Prices Hit Record Levels in May
Sales of detached single-family homes declined on an annual basis for a fifth consecutive month in May, though more modestly than in the two prior months, sliding 10.3 percent from the same month last year to 983 homes sold in May 2014. It’s the lowest sales total for the month of May since May 2011 when 834 homes were sold, and the first time since February – June 2011 that home sales have fallen for five consecutive months in Greater Boston.
A persistently low supply of homes for sale locally continues to hamper sales activity, limiting options for buyers and holding back prospective home sellers from putting their home on the market over concerns they won’t be able to find another home to purchase. In addition, higher home prices which have reduced housing affordability levels over the past year, and tight credit requirements along with substantial student debt are hindering the ability of first-time buyers to enter the housing market.
Despite the slower sales pace, the monthly median selling price for single-family homes increased for a twentieth consecutive month in May, rising 6.4 percent on an annual basis to $532,000. It’s the first time since May 2004 – December 2005 that the single-family median home selling price has risen for such an extended period. Notably, last month’s median selling price sets a new all-time high for May, eclipsing the previous record high median selling price for the month set last year when the median price of homes sold was $500,000. It’s also the fifth highest monthly median sales price on record and just 2.4% below the all-time high monthly median price of $545,000 set in June 2013.
In the condominium market, sales activity also declined on an annual basis last month, falling 13.1 percent from year-ago levels to 928 units closed in May 2014. It’s the largest percentage drop in condo sales on an annual basis in nearly three years, dating back to June 2011 when sales slid 13.2% from the same month one year earlier. While this is the lowest condo sales total for May in three years, the sales volume this May is still the seventh highest on record for the month. Demand for condos remains especially strong among suburban empty-nesters looking to relocate to Boston, as well as with investors, and renters looking to become first-time homeowners.
The median selling price for condominiums continued to rise steadily on an annual basis for a fifteenth consecutive month in May, increasing 5.8 percent over the past year to a new record high median price for May of $433,750. That tops the previous high median price for the month set a year ago, when the median selling price was $410,000, and is just 0.6 percent below the all-time highly monthly median selling price of $436,500 set this past February. The last time the median selling price for condos rose for 15 straight months on a year-to-year basis was October 2004 – December 2005. The median selling price is now up 60 percent from its lowest point during the last market correction when the monthly median price bottomed out at $270,000 in January 2009.
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 May.