Mass. home sales sink 12% in Aug. as prices rise
Brokers cite jobless rise, slowdown of economy
boston.com
By Thomas Grillo, Globe Correspondent, 9/26/2002
Sales of single-family homes fell by more than 12 percent in August in the state, the largest monthly sales decline in two years as unemployment increased and buyers signaled they were fed up with skyrocketing prices, according to data realeased yesterday by the Massachusetts Association of Realtors.
''Unemployment topped 5 percent last month for the first time in seven years, and realtors felt the slowdown as homes stayed on the market longer and sellers realized they won't get a zillion dollars for that three-bedroom Colonial,'' said Rosalind Levine, broker-manager at R.S. Residential in Worcester.
Brokers said during the summer many would-be buyers backed out of deals after hearing news of impending company layoffs.
''We had a person who wanted to buy an $800,000 home and had 20 percent down but withdrew when he heard a rumor that he might get laid off,'' Levine said. ''No one wants to be caught with a jumbo mortgage without a job.''
Sales of single-family homes fell from 5,455 in August 2001 to 4,778 last month, a 12.4 percent decline. Condominium sales also declined, down from 1,646 one year ago to 1,457 last month, an 11.5 percent dip, according to MAR data.
Despite slowing sales, prices continue to soar.
The average selling price for a single-family home reached $368,869 in August, up from $331,801 the same period last year, an 11.2 percent hike. The highest monthly average price on record in Massachusetts came in June when prices reached $369,077.
Condo prices also saw a big jump from $218,999 in August 2001 to $263,991 last month, a 20.5 percent hike.
Peter Casey, MAR's president-elect, said he was not surprised to learn of slowing sales and increasing prices last month.
''The talk of war with Iraq and the stock market bouncing up and down like a yo-yo has cooled sales, and the high end of the market has slowed considerably,'' Casey said. ''Prices remain high, but the rate of appreciation is slowing as well. Over the last three years, we saw increases of 48 percent annually and now the increases are closer to 12 percent.''
Casey believes that if the stock market stabilizes, mortgage interest rates stay low and the United States stays out of a protracted war in Iraq, sales should increase in the last quarter of 2002. But if any of those factors reverse, sales could sink, he said.
The sales slowdown comes at a time when mortgage rates are at historic lows. The national average for a 30-year, conventional, fixed-rate mortgage was 6.29 percent in August, down from 6.95 a year ago, according to Freddie Mac. August was the lowest monthly interest rate since Freddie Mac's series began in 1971.
While realtors complained of a lack of homes for sale, inventories of all properties were nearly unchanged last month compared to one year ago, according to data from Worcester's MLS Property Information Network. In August 2001, there were 18,763 properties for sale, compared to 19,013 last month. In terms of days on market, the amount of time a property is listed before it is sold, the average was 49 last month, compared to 51 in August 2001.
Weaker home sales in Massachusetts was reflected nationally as August sales declined 3.8 percent to a seasonally adjusted annual rate of 5.28 million units, down from 5.49 million units in the same period last year.
Karl Case, a professor of economics at Wellesley College, said he had been expecting a decline in the real estate market.
''You can't wipe out $1 trillion worth of assets in the stock market, have unemployment rising and have the economy going nowhere and not have some impact on housing,'' Case said. ''This could be the beginning of a slowdown in real estate for the first time in a long while especially if consumer confidence declines, unemployment rises and the stock market continues to fall.''
Case noted that while many people were getting out of the stock market and into real estate in recent months, he believes those days may be over.
But Wayne Ayers, chief economist at FleetBoston Financial Corp., said he doesn't make too much of one month's housing sales numbers.
He said while sales fell, they are down from a frenetic pace seen in the last 12 months.
''In spite of the August decline, 2002 will be the best year on record for sales of existing homes,'' Ayers said, ''It was bound to slow and I don't think this is the start of something bad.''
Ummm, okay! <VBG> |
