Sales of single-family homes in Mass. plummet with expiration of federal tax credit

Tuesday, August 24, 2010

Mass. home sales plummet for first time in a year

BOSTON — Sales of single-family homes in Massachusetts plummeted in July when compared to the same month last year, reversing a trend of 12 consecutive months of increases and reflecting a weakened real estate market nationally, according to two reports released Tuesday.

The Massachusetts Association of Realtors said sales declined 28 percent compared to July 2009, while The Warren Group, an independent publisher of real estate data, reported a 26 percent decrease. Both organizations — which use slightly different methods for calculating home sales — also showed prices edging higher despite the sales declines.

The expiration of the federal homebuyers tax credit was likely responsible for the dramatic dropoff in sales, the groups said.

The Warren Group said the number of single-family homes sold in Massachusetts in July was the lowest since 1990.

“Whether this is a temporary dip due to the rush to qualify for the tax credit or whether this is a sign of a declining market for the balance of the year is the big question in my mind,” said Timothy Warren, CEO of the Warren Group.

Every county in the state saw a drop in sales except tiny Dukes County (Martha’s Vineyard), the group reported.

The National Association of Realtors reported Tuesday that sales of previously occupied homes in July fell to their lowest level in 15 years.

Massachusetts Association of Realtors president Kevin Sears, broker and co-owner of Sears Real Estate in Springfield, said it was obvious the momentum from the tax credit has not been sustained into the summer.

To qualify for the tax credit, buyers had to close on purchases by June 30. This led to the largest number of closed sales in Massachusetts in June of any month in four years, Sears said.

Single-family home sales in July plunged 38 percent compared to June, the largest month-to-month drop since the Realtors’ group began tracking the data since at least 1996, Sears said.

MAR reported that the median sales price in July was $333,000, up more than 7 percent from July 2009, while the Warren Group reported a 3 percent increase to $315,000.

But industry officials said market conditions — including higher inventory and historically low interest rates — continued to favor the buyer in Massachusetts, and that prices could soon reflect that.

“Now that the tax credit has expired and activity has been slower, prices are going to fall back,” said Anthony Lamacchia, broker and owner of McGeough Lamacchia Realty Inc. of Waltham.

Associated Press Writer Mark Pratt contributed to this report from Boston.

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