Detached single-family homes sales in Massachusetts in the first quarter of this year fell 6.5 percent, from 8,604 homes sold in the first quarter of 2005 to 8,047, the Massachusetts Association of Realtors reported Monday. It’s the fourth consecutive quarter that activity in the detached single-family home market has declined from the same period one year earlier.
Meanwhile, sales of condominiums remained on a record pace, but were flat over the past year, with 4,071 condos sold from January to March 2006. That equals the number of units sold in the first three months last year, and is an all-time high for first-quarter condo sales.
“After several years of strong sales growth and rapid home price appreciation, we’re back to what many consider a normal market,” said association President David Wluka, of Wluka Real Estate in Sharon, Mass. “To some, especially sellers, it may feel like the market has slowed dramatically, but that’s because we are coming off the record sales pace of the last two years.”
Housing demand, while still historically strong, was tempered by rising mortgage rates and higher energy prices this winter, which caused some to retreat from the market or turn to the more affordably priced condominium market, the report suggests.
This year’s first quarter was the second-busiest first quarter on record for the state’s housing market, with the 12,118 detached homes and condos sold from January-March 2006 topped only by the 12,675 homes and condos sold in the 2005 first quarter.
“It’s still a very active market,” said Wluka. “The mild winter helped get the spring market off to an early start.”
Regionally, sales activity in the detached single-family home market fell in six of seven regions of the state during the first quarter, but increased 1.5 percent from year-ago levels in Western Massachusetts. Sales were essentially flat on the South Coast, down just one unit in the past year, and decreased a modest 1.3 percent in Greater Boston, but more significant double-digit declines occurred in Worcester County and Cape Cod.
In the condominium market, sales improved in Worcester County, Greater Boston, the South Coast and Western Mass., but fell in the Cape Cod, Northeast and South Shore regions.
The continued demand for condos, as well as the modest gain in home sales in the state’s four western most counties, reflects the fact that many buyers are choosing to commute longer distances or purchase less home as interest rates and household utility costs climb.
“Buyers, especially those at the entry-level, are feeling the pinch from rising mortgage rates and higher energy prices, which are simultaneously driving up the cost of homeownership and reducing consumer’s purchasing power,” noted Wluka.
Evidence of the market’s more relaxed sales pace is apparent from the lengthier time it’s now taking for properties to sell. Compared to a year ago, detached single-family homes took two weeks longer to sell this winter, as time on the market increased from an average of 106 days in the first quarter of 2005 to 121 days in the comparable three-month period this year.
Meanwhile, condos are taking roughly a month longer to sell, as the average days on the market increased from 78 days in the first quarter a year ago to 111 days in the three months from January-March 2006.
While prices have softened over the past year, the association’s report found that the statewide median selling price for detached single-family homes is down less than 1 percent from one year ago, declining 0.9 percent from $346,600 in the first quarter last year to $343,500 in the first quarter of 2006. In addition, the statewide median selling price for condos increased 2.4 percent, from $265,650 in the 2005 first quarter to $272,000 in the same quarter this year.
The last time selling prices for detached single-family homes fell in the Bay State was more than a decade ago in the first quarter of 1993, when the price declined 5.5 percent over the same quarter in 1992. Meanwhile, the selling prices for condos have increased for the past 29 consecutive quarters.