Too hot? Sky-high prices may be scaring some buyers away from the housing market

Values are still historically high.Elaine Thompson/AP/file

Home prices around Boston may be getting so high that they are scaring some prospective buyers away, a real estate trade group said Wednesday, pointing to signs that the blistering seller’s market is softening modestly after months of rising values.

A monthly report by the Greater Boston Association of Realtors said the median sales prices of single-family homes and condos both hit record highs in May. The median condo price reached $638,250, up 7.2 percent from the same month in 2019, before the COVID-19 pandemic upended the market last spring. The median single-family home price soared to $761,000, 20 percent above the 2019 level.

Those numbers may level off in coming months, the trade group said, as prices may have risen by enough at this point to keep a substantial number of buyers on the sidelines while also encouraging more sellers to test the market. A wave of new listings has increased the inventory of single-family homes and condos by 20 percent since June 1, the group said.

Dino Confalone, an agent with Gibson Sotheby’s International Realty in Cambridge and the GBAR’s president, said foot traffic has been dropping at open houses in recent weeks as house-hunters opt to extend their leases or delay their searches until the market delivers more-affordable options.

“For now, demand remains strong with lots of millennials entering their peak homebuying years, but affordability is becoming more of a factor in our market as prices continue to rise and mortgage rates start to creep up,” he said in a news release.

Even if the market may be cooling slightly, the realtor’s association said, underlying factors driving the recent surge in values remain in place. Inventory is lower than usual, even as demand has been boosted by a rebounding economy and a general desire for more space.

The trend is especially pronounced when it comes to single-family homes. Even as prices have been rising, the total number of sales has remained historically low. The 1,161 sales closed in May was the lowest number for the month since 2015, with the exception of last year, when the state was in its strictest stage of COVID-19 lockdowns.

The number of homes for sale also declined by 14.7 percent from April, to 1,272, a sign that homes are selling quickly once they are listed.

The inventory of condos has risen, on the other hand, and sales in that category hit a May record of 1,372, which was also a 9.2 percent increase over April’s total. However, the number of condos that went under agreement, but have not yet closed, declined from April’s total, to 1,526.

Overall, Confalone expects prices “to ease in the second half of the year, as the current level of activity isn’t sustainable long-term.”

“We’re already seeing homes with inflated values sitting longer and undergoing price adjustments,” Confalone said. “Properties should be fairly priced, in excellent condition, and have a desirable location to sell quickly, even in today’s seller’s market.”