Pending home sales drop as expected
My thoughts, the video above might be occurring in certain markets but as of now, the Boston condo market remans strong.
Pending home sales drop as expected
Homebuying activity continued to fall throughout Greater Boston last month, as rising mortgage rates, increased consumer anxiety and buyer fatigue continue to weaken demand, according to the Greater Boston Association of Realtors (GBAR) September housing report.
In September, single-family home sales fell 32.3% year over year, with 752 homes sold, compared to 1,110 homes sold in September 2022. Sales fell 31.6% month over month, marking the slowest September for single-family home sales since 1995. September also marked the 16th month in a row single-family home sales fell on an annual basis.
Condominium sales saw an 8.4% decline from a year earlier, with 686 units sold, compared to 749 in September 2022. Month-over-month sales fell 14.1%, marking the weakest September for condo sales since 2002. September was also the 22nd month in a row condo sales declined on an annual basis.
Alison Socha, GBAR president and an agent with Leading Edge Real Estate in Melrose, attributes the declines to economic concerns.
“Economic forces have been weighing down the market for much of the summer which has caused an increasing number of buyers to stop looking, or at least pause their home search,” Socha said. “With interest rates climbing, selling prices still close to record high and inventory levels at their lowest point in over two decades, few are in a rush to buy. Instead, many are choosing to sit tight until more homes come on the market that meet their budget or mortgage rates and prices come down, and that’s led to slower sales.”
Despite the decline in activity, home values continued to rise from last year, although they declined month over month after receiving a boost in listings.
Median sale prices of both single-family homes and condominiums hit record highs last month.
The median sales price of a single-family home in September rose to $849,950, up 11.7% from September 2022’s $761,000. Condominium sale prices also rose, climbing to $680,500, up 8% from last September’s $630,000.
Socha says the market remains very competitive even though mortgage rates have risen to their highest level in more than 20 years.
“With so few properties listed for sale this summer, sellers were eager to seek top dollar, while many homebuyers found themselves bidding against one another in multiple offer situations, and that has helped to support steady price gains over the past year,” Socha said. “In addition, many of those buying in today’s market have accumulated the equity and savings necessary to do so in a higher interest rate and home price environment, thus allowing price growth to continue.”
On the inventory front, there was some marked improvement in September.
At the end of September, there was a two- to three-month supply of properties for sale, up from one to two months of inventory over the past three months.
Active listings of single-family homes in September declined 20% from 1,812 last year to 1,439.
Condo listings also declined, falling 14% from 2,178 last September to 1,873 last month.
“With more buyers getting priced out as mortgage rates climb and a healthy dose of new listings coming on the market since Labor Day, we’re starting to see sellers adjust their expectations and be a bit more flexible on price,” Socha said. “As a result there’s more room for negotiation, and sales prices have slowly begun to come down from their peak highs of earlier this summer. Even so, there’s still plenty of demand to keep prices from dropping sharply.”
Pending-home sales fell for the fifth month in a row in October, posting a 4.6% decline on top of September’s 10.2% drop, the National Association of REALTORS® reported, citing its Pending Home Sales Index.
Year over year, sales were down 37%. Pending sales, in which the contract has been signed but the transaction has not closed, are considered a leading indicator and generally precede existing-home sales by a month or two.
“October was a difficult month for homebuyers as they faced 20-year-high mortgage rates,” NAR Chief Economist Lawrence Yun said in a press release. “The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain. The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.”
Regionally, pending sales in the West fell 11.3% compared to September, while they slid 6.4% in the South and 4.3% in the Northeast. Sales rose 3.3% in the Midwest.
First American deputy chief economist Odeta Kushi echoed Yun’s comments, noting that mortgage-application data thus far in November indicates homebuyers appear to be returning to the market.
“Even so, the housing industry is not through the storm yet,” Kushi said. “Rates will remain high and could even move higher until there is sustained evidence that inflation is receding. Higher mortgage rates keep buyers and sellers on the sidelines.
The housing market may be cooling down.
Pending home sales, a leading indicator of the health of the housing market, fell 1.8% in July, the second straight month of declines. The National Association of Realtors’ (NAR) Pending Home Sales Index, which tracks the number of homes that are under contract to be sold, dropped 1.8% in July from the previous month. The results missed the expected 0.4% increase in sales, according to Bloomberg analysts’ consensus estimates.
“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” said Lawrence Yun, NAR’s chief economist, in a press statement.
All four regions of the U.S. reported a year-over-year decline in pending home sales, which is an indicator of home sales that are likely to take place in one to two months. The only region to post an increase in sales from a month ago was the West, where pending sales rose 1.9% in July from June. But sales in the West are down 5.7% compared to a year ago. Pending sales in the Northeast region recorded a 6.6% and 16.9% decrease — the largest monthly and year-over-year decline, respectively, since the data has been tracked.
“Homes listed for sale are still garnering great interest, but the multiple, frenzied offers — sometimes double-digit bids on one property — have dissipated in most regions,” said Yun.
The number of homes for sale at the end of July totaled 1.32 million units, up 7.3% from June’s supply but still down 12% from one year ago, according to the NAR. Morgan Stanley analysts recently said it would take 1 million to 1.5 million additional listings to bring the market back to its historical average number of homes available for sale.
Despite the slowdown, relief may be on the way. “Inventory is slowly increasing and home shoppers should begin to see more options in the coming months,” said Yun, who noted last month that he expects inventory to continue to improve throughout the rest of the year.
Realtor.com’s latest weekly data also reveals more new home listings in 19 of the last 22 weeks, compared with the same period in 2020. The real estate company said homeowners are responding to market trends and started listing homes in larger numbers.
The historically low inventory has driven home prices to record highs. Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 16.6% annual gain in May, up from 14.8% in April — marking the highest reading in more than 30 years of data.
“In a typical year, summer represents the peak period of homebuying activity, especially for families who want to be settled in a new school district before the next academic year begins,” said George Ratiu, manager of economic research at Realtor.com, in a statement prior to the results. “The highly-competitive real estate market we saw in the first six months of 2021 squeezed available inventory to record-lows and pushed prices to new highs just as summer emerged, leaving many first-time buyers feeling frustrated.”
Amanda Fung is an editor at Yahoo Finance.
Click to View Google Reviews