Housing market outlook unclear

Mass. home sales see 8th-straight monthly drop

The state's housing market is still seeking a bottom as home sales fell sharply in November and prices declined moderately.

The Massachusetts Association of Realtors reported yesterday that sales of single-family homes in the state fell nearly 13 percent from November 2005, the eighth consecutive month of year-over-year sales declines. The median sales price fell 4 percent from a year earlier, to $340,000 from $354,000.

Condominium sales fell nearly 14 percent from the record sales of November 2005, the association said. The median selling price for condos, however, rose about 2 percent, to $270,000 from $265,000.

The continued decline in sales and growth in the number of homes for sale suggest the slumping housing market could slide further before turning up again. The inventory of single-family homes for sale is up 25 percent from November 2005, while the average time a property remains on the market rose to 130 days, compared with 95 days in November 2005.

"As long as inventories are as high as they are, it's going to keep downward pressure on prices," said Alan Clayton-Matthews, an economic forecaster and public policy professor at the University of Massachusetts at Boston.

This week, Warren Group, publisher of Banker & Tradesman, a publication covering banking and real estate in New England, reported November single-family home sales fell 13 percent from a year earlier, and condo sales fell 10 percent. Warren Group's data differ slightly from the realtors association because the company includes homes sold without real estate agents, which the realtors association doesn't track. Warren said the median sales price for a single-family home in Massachusetts fell 6.5 percent from year earlier, to $315,000. The median condo price fell about 2 percent, to $269,900, Warren Group said.

While it's difficult to pinpoint a market bottom, recent forecasts project moderate declines in sales and prices will continue through next year, before beginning to recover in 2008.

Still, said David Wluka, the realtors association's president, signs that the market might be stabilizing are beginning to appear. The pace of the sales declines has slowed , from year-over-year drops of 24 percent in September and 16 percent in October to less than 13 percent in November. In addition, Wluka noted, the median sales price for a single-family home was essentially unchanged from October.

"We're pretty much at the bottom," Wluka said. "Things have been essentially flat," which could portend a good spring market, he said.

Nationally, the housing market may already be turning the corner. The National Association of Realtors reported yesterday that home sales, adjusted for seasonal variations, rose slightly in November from October, the second-consecutive monthly increase. (Valid month-over-month comparisons can't be done with Massachusetts data because the figures aren't adjusted for seasonal variations.) National home sales fell about 11 percent from a year earlier, however.

The national median home price also fell, to $218,000 from $225,000 in November 2005.

Economists say the housing market had to eventually cool after several years of red-hot sales sent prices soaring faster than incomes. In Massachusetts, the gap grew particularly wide, with home prices peaking last year at 8.5 times per capita income, compared to 6.5 times per capita income nationally, according to the New England Economic Partnership, a nonprofit research and forecasting group.

A recent forecast by Global Insight, a Waltham economics research firm, projects the median price for single-family homes in Greater Boston will slip about 2 percent in 2006 and another 4 percent in 2007.

The real estate market correction got well underway in 2006, said Larissa Duzhansky, regional economist at Global Insight. But, she added, "We're not completely done correcting yet."

Robert Gavin can be reached at rgavin@globe.com.