It's unclear whether the decline in Massachusetts home sales in February 2020 was due to the coronavirus or the continued dramatic drop in the number of homes available for sale. Maybe it was both.
Single-family home sales fell 6.9 percent in February compared to February 2019, the Massachusetts Association of Realtors (MAR) reported March 25, 2020. There were 2,493 closed sales statewide compared to 2,679 the previous year.
Although the median price of a home increased 4.2 percent, for the first time in nine months, the median price of a single-family home in the Bay State dipped below $400,000. The median home price was $395,000 compared to $379,000 in February 2019. Median prices have risen or flat for 35 out of the last 36 months.
Simple economics has fueled the increase in home prices over the past several years. The demand has been much higher than the supply.
Single-family inventory plummeted 32.3 percent in February to 8,163 available houses from 12,062 in February 2019. February marked the 96th time in the last 97 months of year-over-year declines in single-family supply. It also was the fewest homes for sale in any February since MAR began reporting such data in 2004.
The number of months supply of single-family houses dropped 34.6 percent to 1.7 months statewide from 2.6 months. About six months of inventory is considered a balanced market between home buyers and home sellers. The number of new listings in February increased by 12.4 percent on a year-over-year basis.
The Massachusetts condominium market experienced an increase in both units sold and median prices in February.
The median condo price rose 13.2 percent in February to $395,000 compared to $349000 in February 2019. Closed sales increased 3.3 percent, up 37 units to 1,153.
Condominium inventory fell 24.6 percent to 3,132 from 4,156 available units in February 2019. February had the fewest number of condos for sale in any February since MAR began compiling such data in 2004.
The number of months of condominium supply nosedived 30.4 percent to only 1.6 months compared to 2.3 months the previous February. Like single-family homes, new listings for condos increased. There were 2,067 listings, up 6.5 percent from 1,940 in February 2019.
With unemployment claims at a record high last week in Massachusetts, it is difficult to predict what real estate sales, inventory, and prices will look like when MAR releases March numbers in April. Unemployment claims in Massachusetts were averaging just under 7,000 per week this year before jumping to nearly 148,000 last week. The private sector could lose about 10 percent of employment in Massachusetts by the summer The Boston Globe reported March 26, 2020.
Mortgage applications to purchase a home dropped 15 percent last week to the lowest level since August, and loan applications fell 11 percent compared to the same week in 2019, the Mortgage Bankers Association reported. March 25, 2020.
The average interest rate for 30-year, fixed-rate mortgage loan declined 15 basis points to 3.50 percent, with an average 0.7 point, Freddie Mac reported March 26, 2020.