The economic shutdown of March and April stalled it, but the spring real estate season eventually reached full bloom amid "super strong" demand that drove prices up to new highs, data on home sales in July shows.
The Warren Group said there were 6,765 single-family home sales in Massachusetts last month, a 5.3% increase from July 2019. The increase came after three months of double-digit declines in year-over-year home sales, and the median sale price rose 8.2% from last year to a new all-time high for July, $460,000.
Analysts said the July data reflected homebuyers who got into the market in May, when coronavirus infection rates began to fall and some restrictions were eased.
"At the start of quarantine, many analysts and local real estate professionals anticipated activity in the second quarter to be awful and the third quarter would be gangbusters," Tim Warren, CEO of The Warren Group, said. "During the lockdown, many people were preoccupied with adjustments to their personal lives. Many were also uncertain about their jobs, as well as the economy, and weren't actively looking for homes. It appears that shopping resumed in May, and the first wave of deals closed in July. Many buyers may have also gained optimism by not seeing wave after wave of layoffs and perhaps encouraged by a booming stock market."
On his organization's podcast, Warren said increased competition for a limited inventory of homes boosted prices in July, a trend that he expects to see continue through the coming months. July inventory was up 2,000 units from June, he said, but this July's inventory was just half of what was available in July 2019.
"Demand is super strong right now ... it seems like we're filling the pool with a garden hose but at the same time draining it with a fire hose," Warren said. "If every buyer was also a seller, an equilibrium would be reached. But it looks like millennials are coming to the market from their apartments for their first home purchase and baby boomers are reluctant to give up their homes for assisted living units."
The Warren Group's podcast also highlighted another trend that showed up in July's home sales data: increases in sales in more rural parts of Massachusetts known as vacation spots were "far in excess" of the state average. Barnstable County saw a 67% increase in sales last month and Berkshire County recorded a 24% increase. Statewide, home sales rose 5.3% and sales in Suffolk County dropped by 23%.
"Is this a trend? An indication of migration to rural areas? I would caution that it's too early to tell. Certainly, we hear a lot about it in the media, but no one can predict the new normal for a post-pandemic world; we are all feeling our way around," Warren said. "Are we seeing people actually picking up and moving to rural areas, or are we seeing people buying a second home for more flexibility in living?"