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State’s home sales worst in 20 years

Median prices also slump in February

By Jenifer B. McKim
Globe Staff / March 30, 2011

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Massachusetts home sales went into a deep freeze last month with the worst numbers in more than 20 years, according to data released yesterday.

Single-family home sales fell 15.7 percent and condominium sales dropped 18 percent in February compared with the same month last year, according to Warren Group, a Boston company that tracks local real estate.

Median prices also declined last month, with single-family homes sinking to $255,000, a 5.5 percent drop compared with February 2010. Condo prices fell to a median of $225,000, a 4 percent drop compared with last year, according to Warren Group.

Housing industry specialists attributed the slowdown partly to the harsh winter weather, which kept prospective buyers at home and made sellers hesitant to put their properties on the market.

Also, during February 2010 the housing market was propped up by the now expired federal home buyer’s tax credit.

“While only remnants remain of the multiple feet of snow we had in December and January, the impact on home sales was evident in February,’’ said Laurie Cadigan, the president of the Massachusetts Association of Realtors.

Eric Belsky, managing director of Harvard University’s Joint Center for Housing Studies, said many people are still reluctant to purchase a home, scared off by the sluggish economy, high oil prices, and worldwide turmoil. In the most expensive Boston-area communities, he said, prospective buyers also are still taken aback by high prices.

“People don’t jump into deflationary markets,’’ Belsky said. “There’s not been a great deal of job growth.’’

For those people looking to buy a home, the choices remain limited. Inventory of homes for sale sank in February — 3 percent for single-family homes and 11 percent for condos compared with the same month last year, according to the realtors group, which also released data yesterday.

Homes also generally took longer to sell in February. Detached single-family homes took an average of 152 days to sell in February 2011, compared with 137 days during the same month last year, according to the local real estate association.

Adding to evidence that the housing market has not yet rebounded, the S&P/Case-Shiller Home Price Indices released data yesterday showing that home values in 20 major metropolitan areas dropped 3.1 percent in January compared with the same period last year. Boston fared slightly better than average — dropping 0.6 percent compared with January 2010. The index measures repeat home sales and is considered by many in the industry to be the best measure of housing values.

Edward L. Glaeser, a Harvard University economics professor, said new data show that the local housing market is stagnating, with buyers staying away and sellers unwilling to sell properties at discount prices. He said median price declines reflected in the Warren data are more likely due to more homes being sold at lower prices than a decline in values.

“During these periods where the market has dropped substantially, people are unwilling to take the loss from their homes, the market just dries up,’’ Glaeser said.

“I think of this as being a period of long, slow price stagnation rather than a big double dip,’’ he added.

Home values in the Boston area dropped about 20 percent from their peak in 2005 to a low in March 2009, and have been wavering over the last two years, according to Case-Shiller data.

Northeastern University economist Alan Clayton-Matthews pointed out that values are still more than 4 percent higher than they were two years ago and the economy appears to be improving.

“It certainly suggests the housing market looks like it has stabilized,’’ he said. “It is probably not going to get worse, but it has yet to really take off.’’

Jenifer B. McKim can be reached at jmckim@globe.com.