November home sales off sharply

Sales of single-family homes fell 9.2 percent in November compared to a year ago, the second consecutive steep monthly decline.

Total sales for the year are falling short of the record pace set in 2004.

The Massachusetts Association of Realtors, in its November report on the state's housing market, said yesterday that 3,713 single-family home sales closed, down from 4,089 in November last year.

Despite the decline, the median price rose modestly, to $354,000 last month. That's 1.7 percent higher than in October and 2.3 percent above November 2004. Homeowners who are forced to sell, due to corporate relocations or other circumstances, are reducing asking prices to lure buyers. But prices overall have been slow to respond to reduced sales volume because many sellers are reluctant to cut prices, hoping the market turns back in their favor, housing analysts said.

Condo sales rose slightly in November and 2005 sales are expected to set another record, but the results suggest that that market is cooling, too. Condo sales rose just 1.4 percent in November from a year earlier. In contrast, October sales rose 15 percent from the year-ago period.

The median condo price slid 2.3 percent to $265,000 in November from October. That's about the same as it was in November 2004.

Economists said a slow-growing job market in Massachusetts, scant population growth, rising mortgage rates, and high real estate prices took the steam out of the state's housing market this year. They said the market could weaken further in 2006.

''Prices are lagging, and there's inertia in them," said Karl Case, a Wellesley College economics professor. Potential buyers ''are discouraged by the high cost of housing," and sellers who ''know what their house is worth" aren't dropping their prices.

Nationwide, sales of existing homes -- including single-families, town houses, and condos -- fell 1.7 percent to a seasonally adjusted annual pace of 6.97 million units in November, the National Association of Realtors reported yesterday.

''A modest downtrend will be good for the long-term health of the housing sector," said David Lereah, the group's chief economist. Many economists say a moderating market, both nationally and in Massachusetts, would be a welcome change after years of big price increases that have made it hard for first-time home buyers to enter the market.

In Massachusetts, single-family sales hit a record in 2004, exceeding the prior record set in 1998 in the midst of the dot-com boom.

This year, ''things are flattening out, because you can't sustain the kind of growth you've had forever," said David Wluka, incoming president of the Massachusetts Association of Realtors.

Condo sales are relatively strong because they tend to be less expensive and ''more affordable than detached, single-family housing in the Greater Boston market area," he said.

A sharp increase in the supply of new and existing residences for sale has also curbed prices. Homeowners are putting properties on the market in far greater numbers than last year, and 2005 housing starts, including condos, have reached their highest levels since the 1980s real estate boom.

Global Insight, a Lexington economics and consulting firm, estimated there will be 16,220 housing starts in the Boston metropolitan area this year, second only to the 18,400 starts recorded in 1988. But the firm forecast a sharp decline next year, to about 11,900.

Looking ahead to the 2006 housing market, Gautham Iyer, a Global Insight economist, said, ''Our expectation has been right on the cusp, maybe very weak growth or potentially some modest declines."

Kimberly Blanton can be reached at blanton@globe.com.