Analyst: Price Shock Concerns But Market Still In “Fast Trot”
Home prices in the red-hot housing market exceeded $500,000 for the fifth straight month in August, but buyers aren’t scooping up the properties as fast as they did during the previous two years as single-family home sales declined for the second straight month, The Warren Group reported on Tuesday.
Homebuyers purchased 6,318 single-family homes in August, down 6.2 percent from August 2020 and 4.6 percent from the same month in 2019.
The shrinking inventory undoubtedly played a role in the slowdown of sales in July and August, according to analysts, but Warren Group CEO Tim Warren said there may be another factor at play causing the “galloping real estate market” to slow to a “fast trot.”
“I think prices have gotten higher than a lot of people can afford. Increasingly the people who can afford to buy have already done so and the rest are ready to give up on home shopping,” Warren said.
The median price of a single-family home in August shot up 11.5 percent on a year-over-year basis to $535,000, about $55,000 more than the median price recorded in August 2020 and up from $420,000 in August 2019. The median price in August 2021 was a new all-time high for the month, and not far behind the $540,000 median price reported in July.
Gov. Charlie Baker has been pushing as recently as Monday in Roxbury to use as much as $1 billion in federal COVID-19 relief to invest in first-time homebuyer and other housing programs that would make purchasing a home more attainable for many Massachusetts families, particularly in communities of color.
Only four counties in Massachusetts – Hampshire, Hampden, Essex and Bristol – reported increases in sales this August over the same month in 2020, while Barnstable and Berkshire Counties saw declines of more than 22 percent each, exceeded only by the 55 percent drop on Nantucket.
“The decline in home sales volume for the second straight month is significant,” Warren said. “The data doesn’t lie.”
Overall, home sales for the year are up 10.3 percent through August, with the median price of the 40,047 single-family homes sold in Massachusetts climbing 17.7 percent to $512,000.
On the other side of the market, condominium sales continue to be strong with the 2,773 sales recorded in August, beating 2020 sales by 7.6 percent and exceeding condo sales from August 2019 by 6.1 percent.
The median condo sale price increased 10.6 percent on a year-over-year basis to $470,000, a new high for the month and the 13th consecutive month that median prices have exceeded $400,000.
While Barnstable County saw a similar drop of 34.9 percent in condo sales in August, Berkshire County posted a 21.7 percent uptick in condo sales last month and Suffolk County, which includes Boston, recorded an 18 percent increase in sales and a 4.1 percent increase in price.