Residential Real Estate
Following increases in June and July, residential real estate markets in New England saw moderate year-over-year increases in home sales in August as well. Much of the recent activity is said to be related to the first-time homebuyer tax credit. Its scheduled December 1 expiration date has led to an increase in pending sales in the Boston area. Contacts are very uncertain about what will happen to home sales once the tax credit expires; while groups in the real estate industry are pushing to extend the tax credit to next year and to expand its impact, the legislative prognosis is unclear.
Although home sales rose in August, home prices continued to decline across New England. Contacts report that median home prices fell between 3 percent and 14 percent year-over-year in August. One contact notes that increased activity related to the first-time homebuyer tax credit is naturally concentrated on entry-level homes; this alters the mix of homes sold and hence reduces the median price.
The inventory of homes for sale continues to decline in Massachusetts and New Hampshire. Contacts report that some potential sellers are still waiting for prices to begin increasing again before listing their homes. Real estate contacts fear that low inventory will hurt sales if potential buyers are unable to find a suitable home
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