Jon Gorey – Globe Correspondent
February 17, 2022 1:27 p.m.
Home sales in Massachusetts fell in January from a year ago, according to The Warren Group, a real estate analysis company. And while prices rose year on year to new highs in January, the typical single-family home sold for less than $500,000 for the first time since March 2021.
There were 3,509 single-family home sales in Massachusetts last month, down 8.9% from January 2021. But last year’s fierce fall and winter market makes comparisons difficult, and a decline was to be expected. Year-on-year sales figures have been down for six consecutive months now, Warren Group chief executive Tim Warren said, and 2021 was the busiest January for single-family home sales. since 1999.
The slowdown in sales is not due to a lack of interest from home buyers, Warren added, but rather a lack of homes for sale. There were about half as many homes and condos on the market in January as they were a year ago when inventories were already low, according to a separate report from the Massachusetts Association of Realtors.
The median price for a single-family home sold in January was $495,000, an all-time high for the month and a 10.7% increase from January 2021. “That’s a lot, but it’s not a astronomical increase,” Warren said. A slowdown in price growth is likely a good thing after two straight years of double-digit percentage gains in house prices, he added.
Moreover, it is unlikely to last long.
“Generally, January and February median prices are some of the lowest of the year, so we’ll be back to over $500,000 soon,” Warren said.
“Legs on the market in places like Wellesley and Newton and Cambridge, there may not be enough people left who can afford that price level, and so there is a drain to what I would call the affordability,” Warren said, noting that the median price of a single-family home in Worcester County rose 10.3% year-over-year, outpacing the most expensive counties that are mostly in within Interstate 495, such as Suffolk, Middlesex, Norfolk and Essex. (View data by county here.)
Statewide price growth was also supported by vacation home buyers, who continue to bid up prices in Berkshire and Barnstable counties. While there were fewer sales of single-family homes on Cape Cod last month than in January 2021, the median price of a home in Barnstable County climbed 18.8% a year ago, from from $505,000 to $600,000.
Economists expect rising interest rates to put some downward pressure on house prices this year as more expensive mortgages erode purchasing power. The average interest rate on a 30-year mortgage was 3.92% on February 17 – almost a percentage point higher than in February 2021. This difference is enough to reduce a homebuyer’s price range by tens of thousands of dollars.
Related Long-term mortgage rates in the United States are soaring and approaching 4%
But Warren fears buyers will be pressured to lock in a lower interest rate, creating something of a stampede in February and March and pushing prices higher in the near term. “People can bid too aggressively for the next two months, hoping that if they overpay by $10,000 in February, it’s the same monthly payment they would have gotten in October. [with the higher rates]”Warren said.
The local condo market mirrored that of single-family homes, with the median selling price of a Massachusetts condo rising 9.5% in January to $438,000 from $400,000 — a new high for the month. Sales volume also declined, down 14.9%, with 1,442 condo sales statewide. Condo sales were flat in Somerville in January, where the median selling price climbed 24.3% year over year to $891,500 from $717,500. Prices in South Boston were flat, with sales down 61.4% from a year ago. (See city-by-city data here.)
Jon Gorey blogs about houses at HouseandHammer.com. Send feedback to [email protected]. Follow him on Twitter at @jongorey. Subscribe to our free real estate newsletter at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook, LinkedIn, Instagram and Twitter @globehomes.