Here's July 2014s Monthly Indicators report from the Greater Boston Association of Realtors
Boston Real Estate Market Trends
Low interest rates and improving job market continue to keep buyer demand high, but the continued shortage of homes for sale resulted in a drop of closed sales in July 2014. Prices continued to move up because demand for available homes to buy outpaced supply. The number of new listings added to the market in July went up for the third straight month was another positive sign that sellers are starting to enter the market.
- July single-family home sales Down 6.3% over last year.
- July Single-family median prices were Up 2.9% to $360,000. 22 straight months of increases.
- July condo sales Down 8.1% and median prices Up 2.6% ($320,000)
- Inventory in July Down 5.0% to 23,117 and Condominiums Down 18.6% to 5,538
- SF listings added to the market in July Up 7.6% over last year. (7,057 from 6,559 in 2013)
- Condo listings added to the market Up 4.7% over last year. (2,274 from 2,171 in 2013)
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The Single-Family Home Market:
- Sales of detached single-family homes declined on an annual basis for a seventh consecutive month in July though more modestly than in any of the previous six months this year, slipping 2.3 percent over year ago levels to 1,455 homes sold in July 2014. The last time home sales fell for seven consecutive months was December 2008 June 2009.
Notably, despite the drop in year-over-year sales, last months sales total is the second best ever for the month of July in Greater Boston, surpassed only by the record high of 1,489 single-family homes sold just 12 months earlier in July 2013. A healthy local job market, record high rents, and the steady recovery in home values over the past two years are helping to keep sales strong. Additionally, new household formation is beginning to rise following the Great Recession, and that along with near record low mortgage rates, and a later than normal start to this years spring housing market has allowed buyer activity to remain steady this summer. Thats evident from the fact single-family home sales also rose modestly on a month-to-month basis by 2.7 percent from an upwardly revised 1,417 detached homes sold in June.
- The monthly median selling price for single-family homes increased for a twenty-second consecutive month in July, appreciating 3.2 percent on an annual basis to $550,000. Its the first time since March 2004 December 2005 that the single-family median home selling price has risen for such an extended period. Notably, last months median selling price sets a new all-time high for July, eclipsing the previous record high median selling price for the month set last year when the median price of homes sold was $576,500. Although this reflects a decrease of 4.6 percent in the median price on a month-to-month basis, the July median selling price of $550,000 is still up 57 percent from March 2009, when home values bottomed out at $350,000 during the recession.
The current period of prolonged home price appreciation is a reflection of todays healthy local economy, strong pent-up demand for homes that built up during the recession of 2008-2011 and the upward pressure being put on home prices as buyers compete for a limited supply of homes for sale. In fact, July marks the seventeenth consecutive month in which the ratio of original listing price to sales price received by sellers has stood at or above 95 percent, and with the typical home sold in July selling for 98.6% of its original list price, its just a half percent below the 21st century best ratio of 99.1% set one month earlier in June 2014.
- The average list time for homes sold increased for the first time in over two years in July, but even so the typical home remained on the market for less than two full months for a third straight month. Single-family homes sold last month were on the market an average of 52 days, compared to 47 days in July 2013, but the average list time this July was still two days fewer than the previous month when the typical home sold in June 2014 was on the market for 54 days.
- After declining during each of the first five months of the year, pending home sales volume increased for a second consecutive month in July, improving a healthy 6.4 percent over the past 12 months to 1,034 homes placed under contract. However, on a month-to-month basis, pending sales slid 21.2 percent from June when a downwardly revised 1,313 homes went under agreement. Nevertheless, the 1,034 homes placed under agreement last month is the most for the month of July since 2005 when nearly 1,200 pending home sales were recorded.
- The inventory of sngle-family homes for sale continues to trail historic norms, declining on an annual basis by nearly 3.3 percent in July and by more than one-quater (27%) in the past 24 months. Its the thrty-third time in the past 34 months the number of homes listed for sale has dropped from the same month one year earlier, and with 2,784 listings on the market as of July 31 the supply of homes for sale entering August is at its lowest level in more than a decade. On a month-to-month basis the number listings also shrunk by 7.5 percent from an upwardly revised 3,010 homes on the market in June, while the number of homes to be listed for sale in July fell sharply by 28.5 percent from 1,673 new listings one month earlier to 1,197 in July, marking the lowest number of new listings added to the market since February when 927 homes were put up for sale.
The inventory of homes for sale as expressed in months of supply was stable over the past 12 months at 1.9 months of supply in July. A balanced market occurs when 7.5 8.5 months of supply exists, so at the current sales pace there is an insufficient supply of homes to meet demand, which is likely to frustrate buyers who lose out in competitive, multiple offer situations, and will discourage other buyers from entering the housing market.
The Condominium Market:
- Sales activity in the condo market declined on an annual basis for a third consecutive month in July, decreasing 10.5 percent from 1,252 units closed in July 2013 to 1,121 condos sold this July. While this decrease is more than double the 4.7 percent sales decline observed one month earlier in June, it is worth noting that July 2013 was the second busiest July on record for condo sales in Greater Boston. Thus, even though sales activity was off by double-digits last month, the 1,121 condos sold this July is the fourth highest sales total for the month ever observed, exceeded only by July 2005 (1,268 units closed), July 2013 (1,252 units closed), and July 2004 (1,187 units closed).
- Unlike the detached single-family market, condominium sales also slowed on a month-to-month basis in July, declining 7.1 percent from an upwardly revised 1,207 units closed in June. The decrease is due in large part to the limited supply of condos for sale, which was down 12.3 percent from June and by nearly one quarter (24%) from July 2013. The lack of listings reflects the popularity of the condo market, where demand is especially strong among suburban empty-nesters looking to relocate to Boston, as well as with investors, and renters looking to become first-time homeowners.
- The median selling price for condominiums rose steadily on an annual basis for a seventeenth consecutive month in July, increasing 7.4 percent over the past year to a new all-time high median price for July of $430,000. That tops the previous high median price for the month set a year ago when the median selling price was $400,000. The last time the median selling price for condos rose for 17 straight months on a year-to-year basis was August 2004 December 2005. As previously noted, the condo market has been plagued by an insufficient inventory of listings to meet current buyer demand and thats fueling much of the steady appreciation in condo prices since the beginning of last year.
As a result, sellers are benefitting. The percentage of original list price to selling price hit 100 percent for a third consecutive month in July, meaning the typical condo owner was able to sell their unit for the full amount of their original asking price.
Although the median selling price for condos declined 4.4 percent on a month-to-month in July, thats down from the all-time high monthly median price of $450,000 observed in June. The median selling price remains up a nearly 60 percent (59.3%) from the lowest median selling price reported in the last market correction which occurred in January 2009 when the monthly median price bottomed out at $270,000.
- The average time for condominiums to sell increased on an annual basis for a second consecutive month in July, increasing by 11 days from 38 days on the market last July to 49 days on the market in July 2014. Average market time also increased on a month-to-month basis in July modestly from an average of 44 days in June, offering additional evidence that the shortage of listings is slowing sales and hindering buyers ability to jump into the housing market.
- The number of condominiums placed under agreement decreased roughly 2 percent in July, dropping from a downwardly revised 947 units placed under contract in July 2013 to 924 units this past July. This marks the fifth time this year that pending sales have declined on an annual basis. Pending sales also declined on a month-to-month basis, falling 18 percent from a downwardly revised 1,129 units put under contract in June.
- The number of condos on the market declined for a thirty-sixth consecutive month in July, declining 24 percent over the past 12 months to 1,425 condos for sale, and by nearly half (48%) since July 2012. Like the single-family market, the current inventory of condos for sale is the lowest monthly listing total in more than a decade, and has been remained persistently below 2,000 units for sale for 16 of the past 19 months. At the current sales pace there is just a 1.3 month supply of condos available for sale, which continues a steady decline from year ago levels when there was a 1.5 month supply in July 2013. As a result, its clear that the on-going shortage of listings continues to put upward pressure on prices and is preventing an even healthier rebound in sales activity from occurring, especially in suburb communities where few new units are being built.