Jon Gorey – Globe Correspondent
April 21, 2022 10:42 a.m.
For frustrated homebuyers, the words “low inventory” must ring in the ears like the unwavering refrain of a boring pop song. But there’s a reason the phrase keeps coming up: Experts say a shortage of homes for sale is the main reason house prices continue to soar with such abandon – which they’ve done again in March.
There were just 3,591 sales of single-family homes in Massachusetts last month, down 6.9% from a year earlier, according to real estate analyst group The Warren Group. But prices continued to climb, with the median sale price of a single-family home up 12% year-over-year to $515,000.
Fewer sales at higher prices is what happens when there aren’t enough homes available, said Warren Group chief executive Tim Warren. “The number of homes for sale has been down for a decade or more,” he said, while demand from home buyers has been relentless, leading to price hikes and intense competition for the few available homes. .
What does “low inventory” look like? In March, there were an average of 3,007 single-family homes for sale in the Commonwealth, according to the Massachusetts Association of Realtors. That was a 30% drop even from the fiercely competitive spring market a year ago, when there were 4,277 homes listed for sale in March. In the relative sanity of March 2019, house hunters had more than three times as many properties to choose from as they did last month, with an average of 10,822 homes to choose from on any given day.
All of this makes house hunting much more work. “It’s practically a full-time job house hunting,” Warren said.
Plus: The average interest rate on a 30-year mortgage has jumped 2 percentage points in the past six months, according to Freddie Mac, hitting 5% in April for the first time since 2011. That boosted the payment buyer’s typical monthly in the hundreds. dollars for a house at the same price.
“It doesn’t make buying a house any easier,” Warren said.
Many home sales that closed in March were likely purchased at guaranteed lower rates in January or February, Warren noted, so sharply higher mortgage rates could still start to dampen demand and price growth in the months ahead. coming.
The Massachusetts condo market also had a lackluster month of sales. The 1,826 condos sold in March marked a 19.5% decline from March 2021, when there were 2,268 sales statewide. Condo sales have fallen by double digit percentages every month this year, Warren said.
The median sale price for a Massachusetts condo rose to $460,000, an all-time high for the month of March and a 4.1% increase from a year ago. Condominium inventory isn’t as depleted, Warren said, which could draw some buyers out of the single-family home market. But he doesn’t think many buyers will pivot as easily if they dream of a yard or lots of space.
“I can’t quite imagine someone buying a single-family home suddenly saying, ‘Well, hell, maybe a condo would be OK,'” he said.
The median price for a condo sold last month in Suffolk County, which includes Boston, Chelsea, Revere and Winthrop, was $695,000, up 8.6% from $640,000 a year ago. year. (View county-by-county data here.)
The March figures also offer insight into price and sales trends across the first quarter.
In the first three months of 2022, single-family home sales rose 8.6% in New Bedford, with the median price up 13.6% from a year ago, from $295,000 to $335,000.
The city of Arlington, meanwhile, is the latest to join the million-dollar club: The median price for single-family homes in Arlington jumped 21.6% from the first quarter of 2021, to $880,000. at $1,069,900. Condominium prices have also jumped in Arlington, rising 23.6% year-to-date to $900,000. (View city-by-city data here.)