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Tight housing market expected to let up in fall

The lack of homes for sale has been the one negative in an otherwise favorable housing market.

Michael Dwyer/AP/File

The lack of homes for sale has been the one negative in an otherwise favorable housing market.

This month, Heather and Kevin Mallett finally moved into the house they had been searching for, a two-bedroom ranch in Revere, delightfully close to the beach.

It took them three years.

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“The things we were seeing weren’t really what we wanted,” Heather Mallett recalled. “We actually thought at one point that we weren’t going to find a house.”

The shortage of homes on the market has frustrated buyers, hampered sales, and boosted prices, but real estate specialists say the tight inventories should ease in fall as more sellers list their homes. That would mean more choices and fewer headaches for people like the Malletts, and help moderate quickly rising prices in some local markets.

Among the hopeful signs: New listings increased in July compared to a year earlier, the third consecutive month of year-over-year increases, according to the Massachusetts Association of Realtors, a trade group. In addition, the number of homes put under contract last month jumped 17 percent from July 2013, an indication that more people are finding properties.

“Low inventory has been the name of the game for the last two years,” said Peter Ruffini, president of the Massachusetts Association of Realtors. “We’re finally starting to see that change.”

The lack of homes for sale has been the one negative in an otherwise favorable housing market. Mortgage rates remain low, averaging just above 4 percent for a 30-year-fixed loan, while the economy, job market, and consumer confidence continue to strengthen.

Closed sales, which typically occur a month or two after properties come under contract, have declined in Massachusetts in five of the past six months, according to the Warren Group, a Boston real estate tracking firm. Prices, however, have continued to rise, underscoring that the problem is insufficient supply, rather than weak demand, analysts said.

“We haven’t seen the jump in sales that we maybe thought we would see,” said Timothy M. Warren Jr., chief executive of the Warren Group.

The housing shortage stems from different factors, including the slow pace of new home construction in Massachusetts. Some homeowners have delayed selling because they worry about finding a new home. Many others have been reluctant to sell homes until values recover to prerecession levels.

But thanks in part to rising home values, this is starting to change in some markets. The median price of a house in Massachusetts has climbed this year to $355,000.

If supplies grow, said Nela Richardson, chief economist at the online brokerage Redfin, sales should pick up because so many buyers are actively searching for homes right now.

“What we’re seeing in the fall is more of that pent-up demand that is basically carried over from the beginning of the year,” she said. “I think we’ll see stronger activity in the second half of the year than we did last year.”

But activity is likely to vary widely. In some areas, particularly Boston and its closest neighbors, low mortgages rates and rising incomes combined with low inventory have contributed to a frenzied market in which desirable homes attract multiple offers and sell rapidly.

“It’s been a fever pitch in and around Boston,” said Linda O’Koniewski, broker-owner of RE/MAX Leading Edge in Boston.

Brian and Katie Collins have seen both sides of the red-hot market in Greater Boston. The couple sold their South Boston condo in just a day, but finding a new home close to the city, in good shape, and priced within their range, was far more difficult.

They ended up spending more than they planned, paying $670,000 for a four-bedroom house in Needham, where they hope to raise a family. Brian Collins called it a lucky find.

“It was definitely overwhelming,” he said of the experience. “If you want to live within [Route] 128, just how expensive things are, it’s a little intimidating.”

In other parts of the state, such as communities in the South Coast and north-central Massachusetts, the housing market is very different. There, many homeowners are still waiting for their homes to recover value.

“It’s a very pocket-driven phenomenon right now,” said Pat Villani, president of Coldwell Banker Residential Brokerage in Waltham. “There can be areas that don’t have any inventory, and there’s other communities right around the corner where there is plenty of inventory. It’s hard to define. It’s been intriguing.”

Priyanka Dayal McCluskey can be reached atpriyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.
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