Single-family home and condo sales fell to their lowest levels in more than a decade last month.

Slowing buyer activity, high mortgage rates and limited inventory contributed to the fall, according to the Greater Boston Association of REALTORS® February market report. 

February sales fell on an annual and monthly basis, but demand rose from January due to interest rates temporarily easing and a softening in median sale prices. 

In February, single-family home sales fell 15.9% year over year, with 414 homes sold compared to 492 homes sold in February 2022. Last month was the ninth month in a row of year-over-year sales declines. Month over month, February’s sales volume fell 18.3% from January, marking the lowest February sales in 12 years. 

Condominium sales also fell from last February by 23.5%, with 427 condos selling last month compared to February 2022’s 558. Last month also marked the slowest February since 2012 for condo closings. 

GBAR president Alison Socha, an agent with Leading Edge Real Estate in Melrose, said that even though today’s market is less competitive than it was at the same time last year, it’s no less challenging for buyers. 

“Today’s higher mortgage rates have led to reduced purchasing power, especially for first-time buyers,” Socha said. “We’ve also seen fewer listings on the market ahead of the spring selling season this year as many prospective sellers have opted to stay put, rather than put their home up for sale and enter a market where they’d have to take on a higher rate mortgage or be unable to find a new home in a timely manner. The market did come to a bit of standstill last month, as buyers had limited options, given there’s so little to sell.”

That slower sales pace led to a softening of selling prices in February both year over year and month over month — the largest year-over-year price drop since October 2011’s 10.3% decline.

The median selling price of a single-family home declined 7.6% from a year earlier, falling to $700,000 from $757,500. It also fell 0.7% from a month earlier, when the median home sale price was $705,000. 

The report also noted that on a month-to-month basis, single-family home selling prices fell in seven of the past eight months and that February’s median price was 22.2% lower than June 2022’s all-time high monthly median of $899,950.

The median selling price for condominiums also fell last month, down 3.1% from a year earlier to $635,000 from $655,000 and down 7.8% from January’s $688,700. 

The report also noted that February’s 3.1% decline is the largest decrease since June of 2020 when the median sale price fell 4.8% from a year earlier. It also noted that February’s median sale price is 1.1% lower than April 2022’s record high of $715,000.

Socha said the buyer pool has shrunk as rising mortgage rates mean sellers can no longer be as aggressive on pricing and buyers have more room to negotiate. 

“Currently there’s very little upward pressure on prices, so in many areas, they’re down from their peak, which should entice buyer activity,” Socha said. “Indeed, most properties sold in February went for less than their asking price, with the typical single-family home selling for 96.8% of its original list price, and the typical condominium garnering 97.3% of its original list price.

But the market still favors sellers, according to Socha, they’re just no longer able to push the envelope on both price and terms.

“Pricing needs to be in line with other similar listings on the market, not set to match or beat what the neighbor’s house sold for last spring or fall, which is another reason we’re seeing a disparity between asking prices and the final sale price,” Socha said. “On top of that, today’s buyers are savvy and acting with less urgency than in recent years, according to GBAR’s president.”

“Many buyers have been house-hunting for months if not years, and most are looking for properties that are move-in ready, so they know what fair market value looks like and aren’t going to pay for a home that is overpriced,” she added. 

Demand continues to be an issue, even as inventory levels had some modest improvement, according to the report. 

Housing Inventory Still in Short Supply

Listings can’t keep up with demand as there is short supply of available homes

In February, active single-family home listings rose year over year up 29.5% to 847 from February 2022’s 654 homes. However, active listings fell 8.8% from January. Condominium listings also increased last month, up 6.1% to 1,345 listings from 1,289 a year prior. Yet, new listings declined last month falling 24% for homes and 25% for condominiums.

Socha said buyers are turning out in large numbers at open houses and property showings, but the influx of new listings they typically see this time of year has yet to materialize.

“Consequently, we’re expecting it to be a competitive spring market, albeit at a slower sales pace, as neither buyers or sellers appear to be acting with a lot of urgency,” she said.