As house prices fall, sales in Mass. rise
October's median for a single-family sank 14 percent to $285,000
Falling home prices are drawing out bargain hunters.
New housing data show a healthy pickup in the number of single-family homes sold in recent weeks, while prices continue to drop.
Home sales were up 14 percent in October, over the same period in 2007 - the second straight month sales increased, according to Warren Group, which tracks real estate transactions.
Meanwhile, the median price on a single-family home fell in October by 14 percent, to $285,000 statewide, only the second month in which median prices were below $300,000 since April 2003, Warren Group said. Condominium sales, however, were off slightly for the month, though price declines in that market were more moderate.
Although this captures a small window of the market, real estate agents and housing specialists said the increase in sales reflects a growing number of bargain buyers homing in on sellers who have acknowledged the need to lower prices.
Chuck Lynch is hoping to be one of those buyers. He and his wife, Kay Lynch, are about to sign papers on a newly built single-family home in Middleton. The owners of the 2,400-square-foot house on an acre and a half dropped the price from more than $600,000 to $540,000, he said.
"The rates are great right now, the price is great right now," Chuck Lynch said. "This is a move to the North Shore, the dream house with more land and space to grow."
What's not clear yet is if this marks the beginning of a recovery in the housing market.
"My expectation would be that the number of home sales will have to climb for several more months before price declines start to level off," said Warren Group's chief executive, Timothy Warren. "The light at the end of the tunnel is still a long way off."
For example, Warren said that during the last housing downturn, in the 1990s, the number of home sales increased for at least eight months before prices stopped sliding. That suggests buyers have more time to shop for bargains.
"Buyers are starting to recognize this is a good time to buy. More important, sellers are recognizing that next spring isn't going to be any better," said Andover real estate agent Peggy Patenaude. "People are coming to the conclusion that unless they want to stay two to three years, it is time to make a deal."
And the Federal Reserve added fuel to the housing market yesterday, saying it would spend up to $600 billion buying mortgages and mortgage-related securities from government-sponsored lenders, including Fannie Mae and Freddie Mac. The Fed said the move would help push mortgage rates down, spurring housing purchases.
Sure enough, mortgage rates dropped "like a rock" yesterday - by as much as three-quarters of a percent, to 5.5. percent levels - said a Bankrate.com reporter, Holden Lewis.
Brian Fogarty, president of Residential Mortgage Group in Reading, hoped the Fed's move would bring out buyers who incorrectly believe it has become too hard to get a mortgage. He said there is money for borrowers with good credit, a down payment, and verifiable income.
"We can finally say there is good news in the mortgage market," Fogarty said. "Maybe people will feel more comfortable there is money out there."
Nationwide, sales prices continued to decline through the third quarter, according to data from the S&P/Case-Shiller Home Prices Indices. For the 12 months ended in September, sale prices in Boston fell 5.7 percent, far less than in many other US metropolitan areas. Nationally, home prices dropped 16.6 percent over that same period.
Because it measures repeat sales of the same homes, the Case-Shiller index is considered among the most accurate barometers of the housing market. However, it lags local data such as those from Warren Group and the Massachusetts Association of Realtors by one month.
The association also released data for Massachusetts, showing a trend similar to the one Warren Group found - prices down and sales up in recent weeks - though in smaller measure.
However, 2008 is shaping up to be a down year. Home sales are down 12 percent over the first 10 months of the year, while condo sales are down a whopping 23 percent, according to Warren Group. Prices, meanwhile, are down 11 percent for single-family homes, to a statewide median of $310,000 for the whole 10 months, while they're off 1.5 percent for condos, with a median of $278,000.
Numbers also differ greatly by county, as well as by city and ZIP code. Plymouth, Berkshire, and Suffolk counties showed the biggest increases in single-family home sales in October. In Suffolk County, sales jumped 71 percent, and in Berkshire County sales climbed 35 percent.
Barnstable, Bristol, and Worcester counties suffered the steepest declines, with prices dropping by about 13 percent from 2007 levels.
The Massachusetts realtors group also noted that the inventory of residential properties on the market decreased in October. Inventory dropped by 13 percent compared to the same time last year, the association said, representing about 9.9 months of supply - a decrease from 11.9 months of supply in October 2007. Lower inventory can sometimes signal a turn in the market.
"An increase in sales in each of the past two months is definitely something to feel good about," said association president Susan M. Renfrew. "But we still need to see how sales are in November to determine if this is a trend."
Jenifer McKim can be reached at jmckim@globe.com. 