Home prices in Massachusetts continued to rise moderately last month despite a sharp drop-off in sales hurt by the expiration of federal tax credits.
The Massachusetts Association of Realtors reported that the median price of a single-family home in the state rose to $333,000 last month, up 7.4 percent from July 2009. A separate report from The Warren Group, which uses some additional transactions for its calculations, shows the median home price rising by 3.3 percent to $315,000 last month.
Home appreciation continued despite a severe plunge in home closings last month. Both The Warren Group and the Realtors reported that statewide sales fell by more than 25 percent last month compared with the same time a year ago. This marked the first time in 2010 that home sales dropped from the same month in 2009.
The drop was widely anticipated by real estate brokers, who had seen a slowdown in purchase-and-sale agreements following the April 30 deadline to participate in generous federal tax credits for most first-time buyers and certain other buyers. It typically takes up to two months for a home sale to close after a purchase-and-sale agreement is signed.
Walter Hall, chairman of HouseSavvy in Norwell, said the expiration of the tax credits for first-time buyers is actually one of the drivers behind the rise in home prices last month. That’s because a greater portion of home sales were in the higher price ranges once first-time home buyers were no longer eligible for the $8,000 tax credit.
“First-time home buyers, by their very nature, are going to buy less expensive homes (so) the sales prices were weighted toward the lower end of the spectrum,” Hall said. “The minute the (credit) evaporated, sales went down, but the sales that did take place were not as weighted as they had been to the lower price range.”
Single-family home prices this year have been stronger in communities that are closer to Boston. For example, The Warren Group reported that the median sale price in Norfolk County rose 13.6 percent to $426,000 last month from July 2009, and it is up 8.6 percent for the first seven months of the year compared to the same time last year.
Meanwhile, the median price in Plymouth County rose 0.7 percent last month to $299,000 and has been essentially flat from January through July compared with last year.
George Jamieson of Capital Residential Real Estate in Hingham said he doesn’t expect prices to rise in the area for the rest of the year, partly because the number of unsold homes on the market is expanding again.
“The inventory levels are still fairly high,” he said. “I would anticipate seeing flat sales prices going forward. ... Now we’re going to see what the real home market is without any sort of (federally-funded) incentives out there for buyers.”