Strong Demand Fuels New Home Sales Records; Inventory Continues to Fall

Massachusetts Association of Realtors President Annie Blatz

WALTHAM, MA—Buyer demand has caused home prices to rise both statewide and in Greater Boston. While the residential sales market continues to enjoy heady times, the lack of inventory, combined with significant demand, will continue to push home prices higher and affordable options lower in the months ahead. The Massachusetts Association of Realtors reports that the statewide single-family median home price rose to a record $380,000 in the month of June.  The 6,740 closed sales in the month of June were the most sales posted in the month since 2004 and were 5.7% higher than June 2015. Closed single-family home sales have been higher 17 of the last 24 months in Massachusetts. Median prices for single-family homes have risen 14 out of the last 15 months. There were 2,646 condominium sales in June, a 0.6% increase from a year earlier. The median price for a condominium in June was $349,000, a 6% increase from 12 months earlier. The condominium market has posted either flat or increased sales in 12 out of the last 16 months and median condo prices have been higher 11 out of the past 15 months the association notes. “The competition to buy a home in Massachusetts right now is very intense,” says 2016 MAR President Annie Blatz, who is a branch executive at Kinlin Grover Real Estate in Brewster, MA. “Buyers are having to use every additional dollar worth of purchasing power they are getting from these historically-low interest rates to close a deal.” The Greater Boston housing market also experienced record-high sales activity in June. The market, fueled by low mortgages rates and a strong jobs market, saw record sales and resale prices. In June, sales of detached single-family homes improved on an annual basis for the 13 ^th consecutive month increasing 1.4% from the 1,870 homes sold in June 2015 to 1,916 this year. The total represents a new record-high total of single-family home sales for the month of June in Greater Boston, according to the Greater Boston Association of Realtors. Condominium sales remained flat slipping 0.1% in June, with 1,388 closed sales compared to 1,389 closed condo sales in 2015. Falling short of last year’s total by just one unit, last month’s sales total represented the third highest total in June for Greater Boston, with the high coming in 2005 when 1,546 condo units traded. The single-family median sales price in Greater Boston rose a modest 4.5% from $560,000 in 2015 to a new record high for June of $585,000. The increase marked the 21 ^st consecutive month that the single-family median sales price has improved. The condo market median sales price increased 9.8% to a new record high for June of $505,000 up from $460,000 in June 2015. With all the new records, it’s hard to find a negative for the residential sales market. However, continued expected strong demand, combined with low inventory levels, will likely cause prices to go even higher,  a scenario that would price out more prospective homebuyers. MAR reports that statewide single-family inventory levels in June fell 28.1% year-over-year to 17,711 homes for sale. Months of supply fell 37.9% in June and is now at just 3.6 months as compared to 5.8 months of inventory on the market in June 2015. Another negative indicator is that new listings fell 8.3% last month to 8,612 units statewide. The association reported that inventory has fallen for the 53 ^rd straight month and new listings added to the market were down for the third time in the last year. The condominium sector posted a slight increase (0.6%) in inventory last month, the first time in 65 months that inventory has increased. New listings added to the market (2,816) in June were down 7.1% from a year earlier and was the third time in 12 months that new listings were down statewide. The months of supply for condominiums were down to 2.3 months in June. A year ago, the months of supply was at 3.6 months. MAR President Blatz tells Globest.com that local Realtor officials across the state say demand is strong, but inventory is inadequate to meet that demand. “The supply is affecting prices because the demand is so high. One of the biggest reasons for the low inventory is that people who would ordinarily would want to sell a home and then buy a different home are reluctant to put their home on the market because they don’t think they will be able to find something to replace it,” Blatz says. “That is creating fewer homes coming onto the market and that is contributing to the lower level of inventory in general.” The low inventory is reducing purchase options and is creating multiple bid scenarios for some listed homes. It is also reducing the average days on market because an attractively priced home will sell quickly, she added. She says that MAR does not see anything on the horizon that would reverse  the strong sales environment, as well as the continued low inventory for sale.