In its latest “Beige Book” report, the Federal Reserve says the Boston district’s economy and housing market are slowly improving, though there are still weaknesses. Following is what the Fed said about the Boston District’s residential real estate market:
Home and condo sales in New England increased significantly in November 2009 compared to the previous November. Much of this increase can be attributed to the original November 30th deadline for the first-time homebuyer tax credit. Although the tax credit has since been extended and expanded, many consumers earlier set up deals for November closings to take advantage of the credit they thought would not be available after the month ended. Thus, November home sales increased from 50 percent to 75 percent year-over-year across the region. In addition to the expiring tax credit, contacts attribute the steep year-over-year increases to the fact that November 2008 was a particularly poor month for home sales because of the stock market collapse in the fall of 2008.
Nevertheless, pending sales numbers in November looked strong in Boston and the rest of Massachusetts, suggesting that sales may continue to increase in the coming months, at least until the new tax credit expires. Contacts are concerned, however, that ongoing declines in inventory in Massachusetts and Rhode Island will constrain sales unless the expansion of the tax credit to “move-up buyers” brings more sellers into the market.
Home prices did not show as much improvement as sales in November. Median prices declined modestly year-over-year in New Hampshire and Maine, while increasing by about 1 percent in Massachusetts and Rhode Island. However, as in recent months, median prices were probably affected by the concentration of sales among first-time homebuyers. Condo markets also saw large sales increases and moderate price declines in November.