Mass. home sales plummet 21%

The Boston Globe reports:

The number of single-family homes sold statewide fell 21 percent in January, the largest year-to-year decrease in monthly home sales since April 1995, and another sign that the once red-hot local real estate market is cooling, the Massachusetts Association of Realtors reported yesterday.


Based on the supply of homes for sale, up sharply from a year ago, the real estate market favored the buyer in January.

''For the last few years, buyers often outnumbered the supply of homes for sale, allowing prices to escalate rapidly, but that's no longer the case," said association president David Wluka.

The median selling price for a single-family home dropped to $345,500, compared with $346,000 in January, 2005, when the sales total was the second highest on record for January.

Sales of single-family homes fell for the fourth month in a row, something that hasn't happened since early 2003.

More significantly, single-family home prices in January fell 0.1 percent, breaking a 114-month streak of rising prices. At the peak of the market, between April 2004 and March 2005, prices rose at a double-digit percentage clip for 11 of those 12 months.

We doubt Massachusetts can have another 114 month run of increasing home prices very soon.For a state to lose population in the last two years and have increasing home prices means speculators have driven the market.The downside could move much quicker than the upside.That's the nature of bear markets.