Mass. home sales plummet 21%

The number of single-family homes sold statewide fell 21 percent in January, the largest year-to-year decrease in monthly home sales since April 1995, and another sign that the once red-hot local real estate market is cooling, the Massachusetts Association of Realtors reported yesterday.

Based on the supply of homes for sale, up sharply from a year ago, the real estate market favored the buyer in January.

''For the last few years, buyers often outnumbered the supply of homes for sale, allowing prices to escalate rapidly, but that's no longer the case," said association president David Wluka.

The median selling price for a single-family home dropped to $345,500, compared with $346,000 in January, 2005, when the sales total was the second highest on record for January.

Sales of single-family homes fell for the fourth month in a row, something that hasn't happened since early 2003.

More significantly, single-family home prices in January fell 0.1 percent, breaking a 114-month streak of rising prices. At the peak of the market, between April 2004 and March 2005, prices rose at a double-digit percentage clip for 11 of those 12 months.

The state's real estate market is cooling much faster than the national market. Nationwide, home sales were down last month 4.8 percent from the pace of the previous January, according to the National Association of Realtors, but prices were still rising. Across the country, the median price for an existing single-family home was up 13.1 percent from a year ago, to $210,500.

Meanwhile in Massachusetts, the condo market continued to outpace the single-family home market. January condo sales rose 2.5 percent; the median condo price was $270,000, up 1.9 percent from January, 2005.

The number of ''active listings" -- homes being offered for sale -- for both single-family homes and condos in January rose 41 percent from January, 2005, the realtors association said.

''Buyers were faced with higher mortgage rates, increased inventory levels, and bold predictions of major price corrections last fall, prompting many to postpone their home search until after the first of the year," Wluka said.

The group sees January figures as a sign of a local housing market ''returning to normal" after a period of extraordinary results. Wluka discounted any notion of a bubble market, where prices far exceed what market fundamentals would suggest.

In the fall, consumers were bombarded with media stories about a possible housing bubble, and that caused many potential buyers to adopt a wait-and-see attitude.

''It's a balloon, not a bubble," Wluka said of the local housing market. ''Balloons inflate and deflate; bubbles burst."

Wluka said he expects prices to ''stabilize" but not necessarily fall.

The numbers released yesterday reflected sales that closed in January. Typically, several weeks elapse between a buyer's agreeing to purchase a home and a sale closing, so the January numbers largely reflect consumer decisions made in November and early December.

More recently, activity has picked up because of mild weather and ''more realistic pricing on the part of home sellers," Wluka said.

Having seen neighbors sell their homes for astronomical amounts, sellers have been slow to adjust to the reality that the local housing market is cooling, but that's changing, he said.

Another positive sign is that mortgage rates edged downward in January to their lowest level in three months, Wluka said.

David Drinkwater, the president of Grand Gables Realty Group in Scituate, offered his market assessment.

''I think the spring will be a decent period," he said. ''I don't anticipate any widespread corrections in prices."

Still, the recent numbers were sobering. The number of single-families sold slid from 2,968 in January, 2005, to 2,345 in January, 2006. The last time there were fewer January sales was 1996.

As for condos, 1,281 sold in January, compared with 1,250 in the same month a year ago.

Chris Reidy can be reached at reidy@globe.com.