The growth in the median price of a Massachusetts single-family home has slowed over the past six months, but it’s unclear whether the slowdown in price growth will trigger an increase in inventory.
Through the first five months of 2023, the median price of a single-family home rose 0.9 percent to $560,000 and increased 0.2 percent in May to $616,450 year over year, according to the Massachusetts Association of Realtors. Despite the price increases slowing, the sale of houses plummeted 22 percent in May and 23 percent through May.
At the end of May, there were 4,668 single-family homes for sale statewide, 25 percent fewer than the 6,253 available in May 2022. In May 2018, there were 13,427 houses on the market. A lack of inventory has negatively impacted sales over the past two years.
Over the six months ending in May 2023, the increase in median house price averaged just over 1 percent compared to slightly more than 7 percent on average during the six months from June 2022 through November 2022. During the same period a year ago (December 2021 to May 2022), the average increase was more than 11 percent. The growth in the median price of a single-family home has slowed significantly.
The question is whether homeowners will view the price increase slowdown as the real estate market reaching a plateau and a time to sell. Homeowners have been sitting on the sidelines, not interested in today’s higher mortgage interest rates and entering a real estate market where competition for scarce homes has been fierce.
Homes receiving five or more offers are commonplace, and 15 or more offers happen at surprising frequency. That’s great for the homeowner selling, but not fun when that homeowner starts looking for a new property.
The Massachusetts condominium market has followed a similar path as single-family homes in 2023, with price growth slowing, sales falling, and supply shrinking.
The median condo price rose 1 percent in May to $543,870 from $538,000 in May 2022. Condominium prices rose 4 percent to $519,000 from January through May compared to the same five-month period last year. The number of units sold dropped 23 percent in May and 24 percent through May on a year-over-year basis.
The number of condos available slid by 18 percent to 2,585 units from 3,147 in May 2022. Five years ago, in May 2018, there were 3,865 units available.