State home, condo sales slip in key quarter

Home sales across the state fell nearly 11 percent in the second quarter as the real estate market slowed, with Cape Cod, central Massachusetts, and the Northeast and Southeast corners of the state experiencing the sharpest declines.

The price of single-family homes also dropped, though not as severely. Statewide, the median price fell 1.3 percent, to $360,000. The drop was largest in central Massachusetts, where prices were down 3.3 percent, to $290,000, compared to the same period last year.

But the real estate market in the Boston area was less volatile than the rest of the state. The number of single-family home sales fell about 5 percent in the quarter, to 2,971, while the median home price remained virtually the same at $499,900.

The Massachusetts Association of Realtors, which provided the data, defines Greater Boston as an area bounded by Franklin to the south, Hudson to the west, and Everett to the north.

Second-quarter results are an important gauge of the state's housing market, because about one-third of annual sales occur from April to June. Real estate agents said the market is following a pattern typical in downturns: Properties in desirable neighborhoods with good schools close to Boston tend to hold their value better than those in other locations.

``That was true in 1989 to 1992 -- same thing," said Brigitte Senkler, vice president of Coldwell Banker Residential Brokerage in Concord. During the boom, she said, ``people had hardly any inventory to choose from. Now people will buy in those towns before they go to another town."

Acquiring a home in Wellesley, Weston, Concord, Carlisle, Lexington, she said, is ``like buying a blue-chip stock."

Soaring gasoline prices have also increased buyers' interest in communities with short commutes or easy access to Boston commuter trains, agents said.

Condominium sales also slowed in the quarter: Sales fell 8 percent in Greater Boston and 34 percent on Cape Cod. Prices remained level, with the median condo price holding steady at $280,000. Roughly one-third of the real estate sales in the quarter were condo units, while two-thirds of the sales were single-family homes.

``We're going through a correction" on Cape Cod, said Thomas Dillon, a Hyannis agent with Realty Executives. ``We went through five years of insane growth."

Yet, the median house price on Cape Cod rose 2.5 percent, to $410,000, and condo prices rose 1.5 percent, to $264,850.

Dillon attributed the rising median price to strong sales volume among high-priced residences. The typical Cape house that might have sold for $379,000 last summer is selling for only $350,000, or 7.7 percent less, he said.

Pressure on the Cape's house prices is building, and agents said some buyers continue to sit on the sidelines in hopes prices will drop.

Second-home sales make up about half of the Cape's housing market.

Markets with lots of vacation homes tend to be more volatile, because the purchases can be delayed if buyers face obstacles such as higher interest rates, increases in monthly payments on adjustable-rate mortgages on their primary homes, a lackluster rental market, and a spike in foreclosures.

Barnstable County experienced the single largest increase in foreclosure filings in Massachusetts, 78 percent, over the past 12 months, according to ForeclosuresMass.com, which compiles filings by mortgage lenders in the state's Land Court.

``A lot of people who bought in '04 or '05 bought doing 100 percent financing with interest-only loans," Dillon said. ``I think a lot of them didn't understand what they were doing -- your payment was $999 and all of a sudden it's $2,999."

Nancy Betz, executive vice president of the Plymouth and South Shore Association of Realtors in Pembroke, said Boston's market did not decline as much as elsewhere in the state, because older homeowners whose children have grown are selling suburban homes to move into, or closer to, Boston.

``If you look at the rest of the state, we're really average," Betz said about the South Shore's sales decline of about 14 percent . ``It's more that Boston is different than all the suburbs."

David Wluka, the president of the Massachusetts Association of Realtors, said that prices are not declining sharply in response to falling sales. The second quarter of 2006 was the third-strongest on record, after the second quarter of 2004 and 2005.

``I don't think sellers are seeing a crisis situation," he said. ``I'm seeing some concessions from sellers, but not a whole lot."

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