Massachusetts real estate prices keep increasing, but the story behind the seemingly endless rise in the cost of a home is the ever-shrinking number of homes for sale.
There were more than 3,000 fewer single-family homes available in August 2019 compared to August 2018, the Massachusetts Association of Realtors (MAR) reported September 25, 2019. Single-family inventory plummeted nearly 20 percent, with the number of houses for sale declining from 16,628 to 13,341 homes on the market in August 2019.
The inventory of single-family houses has decreased 90 times in the last 91 months on a year-over-year basis. August 2019 had the fewest homes on the market in any August since the MAR began reporting such data in 2004.
The number of months supply of inventory dropped 20 percent in August 2019 to 2.8 months compared to 3.5 months in August 2018. Generally, about six months of supply of inventory is considered a balanced market between home buyers and home sellers.
The situation is not likely to improve much, if at all, over the next month or two. The number of listings hitting the market in August declined 11.1 percent to 5,973 houses from 6,718 in August 2018.
Homebuyers were hopeful the inventory situation might improve for the longterm, with recent increases in available condominiums. The rise in the number of condo units on the market ended in August.
After seven months of Massachusetts condominium inventory increasing on a year-over-year basis, the number of condos available dropped 5.5 percent in August 2019 to 4,459 compared to 4,215 units in August 2018.
The number of months of condominium supply dipped 4.2 percent to 2.3 months in August 2019 compared to 2.4 months in August 2018. New listings during August fell 11.3 percent from August 2018.
With home buyers outnumbering home sellers, the median home price in Massachusetts continues to increase, crushing the homeownership hopes of many prospective first-time homebuyers. The lack of options and rising home values has put the breaks on home sales.
The median price of a single-family home rose 2.9 percent to $430,000 in August 2019 compared to $418,000 in August 2018. Home sales fell 3.8 percent to 6,221 compared to 6,466 in August 2018.
The median price of single-family houses has increased or been flat for 35 of the last 36 months on a year-over-year basis. Closed sales have decreased or been flat for eight of the last 12 months.
Median condo prices increased 3.1 percent in August to $400,000 from $388,000 in August 2018. The number of units sold dropped 9.4 percent to 2,249 in August compared to 2,481 closed sales in August 2018.
The median price of a condominium statewide has risen or been flat for 32 out of the last 36 months. Closed sales have fallen or been flat for 10 out of the past 12 months.
The decline in mortgage interest rates over the past year has helped a little with affordability. The 30-year, fixed-rate mortgage declined 11 basis points for the week ending September 26, 2019, according to Freddie Mac's weekly Primary Mortgage Market Survey.
The 30-year note averaged 3.64 percent, with an average 0.6 point, compared to 3.73 percent the previous week and 4.72 percent the same week a year ago. Mortgage interest rates have averaged less than 4 percent for nearly five months.