Single-family home prices fall sharply in April

Massachusetts median down 12 percent over a year, to $305,000

Sales prices for single-family homes in Massachusetts fell sharply in April, accelerating a decline that is now in its third year, according to Warren Group data.

The median single-family home price fell 12 percent in April, compared to the same month last year, the largest one-month drop since Warren Group started counting in 1987.

The median price for 2008 now sits at $310,000.

The falling prices are painful for many homeowners, reflecting the declining value of their properties. But the accelerating pace of the decline also means the market finally is diving toward a new equilibrium. Prices held relatively steady throughout 2007, even as sales volume fell sharply. Now, more sellers are cutting prices.

The number of single-family sales fell 12 percent in April, compared to last year, but that was the smallest monthly decline in sales volume since August, an eight-month stretch.

"We've lived with this for a while now, and I think sellers are understanding better" that they need to cut prices, said Art Foley, owner of Century 21 Annex Realty in Quincy.

In some cases, Foley said, sellers are even asking for a lower price than they believe the property is worth, in a bid to stir buyer interest.

Warren Group reported 3,215 single-family sales in Massachusetts in April, down from 3,654 last year. The median price fell to $305,000, from $346,750 last year. Both drops were about 12 percent.

Also yesterday, the Massachusetts Association of Realtors reported that single-family sales involving a real estate agent - a subset of the Warren Group data - dropped 15.8 percent and the median price fell 8.7 percent. The number of sales reported by the trade association was the smallest for April since 1995.

Some of Boston's nearby suburbs continue to buck the trend. Median prices are up so far this year in Arlington, Belmont, Brookline, and Needham, for example.

Smaller cities, in contrast, continue to see the biggest declines. The areas hit hardest include Brockton, Fall River, Law rence, and Lynn.

The state's condominium market remained in a holding pattern resembling the single-family market last year, with the number of sales falling sharply while prices remain relatively stable.

Warren Group reported that sales fell 22 percent, compared to the same month last year, while prices fell 3.6 percent.

In April 2005, 2,856 condos sold at a median price of $273,500. In April 2008, only 1,714 condos sold, but at almost the same median price, $265,000.

The ongoing malaise in real estate sales appears to be driven primarily by the contraction of the mortgage market. The mortgage industry has significantly tightened lending standards, reducing the amounts many people can borrow and effectively reducing the number of people who can afford to buy a home.

It's not the economy. Job losses or wage stagnation are the most common causes of a housing slowdown, but the Massachusetts economy grew at a 3.2 percent annual rate during the first three months of the year, according to the University of Massachusetts. That's about five times the national rate.

The local housing market continues to fare somewhat better than the nation's as a whole.

The most widely respected index of home prices, the S&P/Case-Shiller index, reported yesterday that Boston's housing slump completed its 30th month in March, as prices fell a steep 5.9 percent, compared to the same month last year. Prices now have fallen 13 percent from the peak of the local market in September 2005.

But prices in a composite of other major markets were down 14.4 percent since last year, and more than 20 percent since the peak of the market.

The Case-Shiller data are reported one month behind Warren Group's, but are considered more reliable. Warren Group calculates the median price for home sales, which can be skewed by unusual sales volume of homes in a particular price category. Case-Shiller bases its index on a comparison of repeated sales of the same homes, a more stable measure of price trends.

Binyamin Appelbaum can be reached at bappelbaum@globe.com.