Sales continued to slow across the Boston housing market last month, but the start of the year also brought increased buyer activity, according to the Greater Boston Association of Realtors.

Both single-family and condominium sales fell year over year while improving inventory levels and declining mortgage rates brought more buyer activity to the market compared to recent months. 

In January, single-family home sales fell 33.8% year over year with 500 homes sold compared to 755 homes sold in January 2022. Last month was the eighth month in a row of year-over-year sales declines. Month over month, January’s sales volume fell 44.8% from December marking the lowest January sales in 14 years. 

Condominium sales also fell from last January by 24%, with 553 condos selling last month compared to January 2022’s 728. Last month also marked the slowest January since 2015 for condo closings. 

GBAR president Alison Socha, an agent with Leading Edge Real Estate in Melrose, said buyers were hard to find in the last quarter of 2022 as “stubbornly high inflation and a steady rise in mortgage rates between September and November spooked many and priced some out of the market entirely.” 

“In addition, many sellers were reluctant to accept the fact that market conditions had changed during that period and were slow to adjust prices,” she said. “That’s caused homes to take longer to sell, and when combined with an already reduced number of listings for sale you get a slower sales pace.”

Fewer buyers in the last three months of 2022 led to last month’s continued softening in prices, according to the report. 

The median selling price of a single-family home declined 2.4% from a year earlier falling to $707,250 from $725,000. It also fell 4.4% from a month earlier when the median home sale price was $740,000. The report also noted that on a month-to-month basis, single-family home selling prices fell in six of the past seven months and that January’s median price was 21.4% lower than June 2022’s all-time high monthly median of $899,950.

Meanwhile, the median selling price rose last month in the condo market, up 14.9% from a year earlier to $685,000 from $586,367 and up 12.2% from December’s $610,750. The report also noted that even with prices rising, the median selling price for condominiums is still 4.2% below April’s record high of $715,000. January was also only the second time condo prices rose on an annual basis over the past seven months. 

Socha said last year’s doubling of mortgage rates led to a significant drop in purchasing power and a steady decline in properties seeing competing offers, which has led to some softening of home values. 

“The reality is buyers can’t afford as much home as they could 12 months ago, so many are either unable or unwilling to get involved in bidding wars,” she said. “Sellers also have begun to adjust their asking prices to align more closely with current  listings rather than trying to top what their neighbor’s property sold for, and that’s allowed prices to level out.”

In January, most homes sold for less than the asking price, according to the report, which found the typical single-family home sold for 96.6% of its list price and condos sold for 97.8% of their original list price. 

Inventory continues to rise

Inventory levels are improving and that’s helping to relieve pricing pressures, according to the report. 

In January, active single-family home listings rose year over year for the ninth consecutive month up 55.5% to 925 from January 2022’s 595 homes. Condominium listings also increased, up 12.7% to 1,289 listings from 1,144 a year prior. 

Socha says with more improvement in listing inventory in the months to come, buyers are returning. 

“Buyers are back and eager to get a head start on the spring market now that mortgage rates have retreated a bit,” Socha stated. “There has been a steady uptick in requests for showings and a lot of foot traffic at open houses over the past several weeks, but would-be sellers are in no hurry to list their homes for sale. Consequently, as the competition has picked up, multiple offers, pre-offer inspections, and certain buyer concessions have made a comeback.”

Even though inventory is improving, demand still far exceeds supply, according to Socha, with just two months of inventory on hand at the start of February. “As a result, we expect any price declines that occur to be fairly modest,” she said.