Tight supply saps home, condo sales
Massachusetts home sales fell in May, compared to the same month last year, as a tight supply of properties on the market continued to frustrate buyers, according to analysts and industry officials.
Sales of single-family homes dropped nearly 3 percent in May, the third year-over-year decline in the past five months, the Warren Group, a Boston real estate tracking firm, reported Tuesday.
Condominium sales fell nearly 6 percent from May 2014, the seventh consecutive month of declines compared with a year earlier, according to the Warren Group.
“There just aren’t that many homes for sale,” said Timothy M. Warren Jr., chief executive of the firm. “There are a lot of eager buyers who find two things: lack of choice and more competition.”
Real estate agents and analysts have blamed a lack of homes on the market for lackluster sales over the past several months and for the bidding wars over available properties that have broken out in many communities.
In a separate report on Tuesday, the Massachusetts Association of Realtors said the number of single-family homes for sale plunged 17 percent from May 2014, the 40th straight month of falling inventories.
Corinne Fitzgerald, president of the association, said that would-be sellers are holding onto their properties as they worry about finding a new place to live in a competitive market. In addition, Fitzgerald said, housing construction has lagged for years, contributing to the imbalance between supply and demand.
“There is no question,” Fitzgerald said. “We need to be able to build more homes.”
Home prices have mostly climbed in recent months, although the state median remains below the prerecession peak.
The median single-family home price, $340,000 in May, was unchanged from a year earlier, according to the Warren Group. The median condo price rose 2.2 percent to $327,000 from $320,000 in May 2014.
The spring selling season, which real estate agents say generally runs from March to July, got off to a slow start this year following a winter of record snow. Industry officials and analysts noted that the closed sales reported in May generally went under contract near the end of March (it typically takes 30 to 60 days for a home sale to close) and reports in the next few months could show increased activity.
Fitzgerald said that new listings have increased recently, while the improved economy and low mortgage rates should continue to lure buyers. The average rate on a 30-year mortgage was 4 percent last week, down from about 4.2 percent a year earlier, according to Freddie Mac, the government-sponsored mortgage company.
Barry Bluestone, an economist and director of Northeastern University’s Dukakis Center for Urban and Regional Policy, said the disappointing sales of recent months may prove temporary as demographic changes over the longer term spur increased activity. Aging baby boomers will continue to downsize to smaller quarters over the next few years, while younger families will seek single-family homes.
“I don’t think these [current housing] numbers represent the future,” he said. “The more important story is what will occur in the next three to five years.”