Home prices edged up despite a dramatic drop in sales

Home Buying

A cooling market is forcing sellers to resort to things they haven’t done in years: ask for less money and offer concessions.

Its a confluence of calamities for those looking to get into homes and those looking to get out of them.

Mortgage rates have doubled since March, but competition is easing as more prospective buyers are forced to sit on the sidelines, fingers crossed that market conditions will improve.

Home prices are climbing but not at the breakneck speed seen in the past few years.

And amid this climate, sales have gone off a cliff. “Sellers are increasingly cutting prices and offering concessions to attract a greater number of buyers,” the Massachusetts Association of Realtors (MAR) said in a news release Tuesday.

How much are sales off?

The Warren Group reported Tuesday that single-family home sales in October were down 21.5% year over year and 37.8% since October 2020. Condo sales dropped 17.9% year over year and 30.3% since October 2020.

This is consistent with how the housing market is acting nationally, where home sales dropped 24% year over year, MAR reported: “Stubbornly high inflation and soaring borrowing costs have eroded buyer purchasing power and have caused the market to cool rapidly this year.”

Inflation appears to be taking its toll.

“A dwindling inventory, rising interest rates, and the high cost of consumer goods continued to have an impact on home buying activity across Massachusetts in October,” said Tim Warren, CEO of The Warren Group. “In fact, this is the fewest number of single-family home sales for the month of October since 2012. It’s also important to note that even though the median sale price continued to increase, the four percent gain was very modest when compared to the price hikes we’ve been seeing over the last few years.”

The median sales price for a single-family home in Massachusetts was $520,000 in October, a record for the month, but it was the smallest increase year over year since June 2020, according to The Warren Group.

Condo prices also set a record for the month. The median cost was up 12.7% year over year to $479,000.

“The spike in the median condominium price is likely the result of prospective buyers turning to the condos as an alternative to single-family homes,” Warren said.

There may be deals to be had in Suffolk County, however, where condo sales are down 13.9% this year, and the median sale price ($627,000) slipped 1.3%. (Suffolk County includes Boston, Revere, Chelsea, and Winthrop.) The median single-family home price here also fell: 2.6% to $650,000.

Compare that with Essex County, where condo prices are up 19.9% and single-family home costs rose 3.4%. See where prices are rising or falling in The Warren Group’s county-by-county breakdown.

Drilling down into the town-by-town sales numbers, the median condo price in Boston proper was down 6.8% year over year in October, steady in Cambridge, and 5.4% less in Quincy. Contrast that with Plymouth, where the median condo price in October reflected a 32.9% increase.

In Newton, the median single-family home price slipped 4.7% year over year, while next door in Needham, prices plummeted 33.7%. That’s based on six fewer home sales, but let that sink in.

The multi-family home market is also experiencing a drop in sales, according to a report the Greater Boston Association of Realtors (GBAR) released Tuesday. Sales were down 27.3%.

The association posits that the “less competitive environment has created a more level playing field between buyers and sellers.”

“The market has started to normalize. The days of waiving home inspections, multiple offers with intense bidding wars, and properties selling before they’ve been listed or shown are over,” said Melvin A. Vieira Jr. of RE/Max Destiny and GBAR president. “Buyers now have room for negotiation and are proceeding much more cautiously. As a result, we’re seeing more price adjustments and longer listing times before a sale.

“The rapid, double-digit annual price gains that were occurring as recently as this spring have come to an end.”