July home sales in Maine followed a national pattern – a significant drop in year over year results that was somewhat anticipated, yet stunning in its absolute number.
After months of increases, sales of single family homes in Maine dropped 30% compared to July 2009. For the month a total of 807 homes were sold versus 1,154 the year before.
This decrease follows an encouraging first six months of 2010, which reflected a 27% increase over 2009.
Most observers of the national real estate market expected a decline in sales in July and August as the things settled down following the expiration of the tax credit, which in many ways created an artificial surge in demand earlier in the year. The real question is whether we are experiencing a “pause” in market activity, or entering a period of continued declines in sales.
Interpretation of Price Improvement
The median sales price for homes in Maine increased by 4% to $172,500 in July 2010 compared to July 2009, continuing a positive trend for the year that may reflect a slight improvement in the sales of higher priced homes and an overall stabilization of home prices in many areas of the state.
In Cumberland County the median price in July 2010 was $247,500 compared to $234,900 in 2009. A three month rolling average of May, June and July, which reflects the most recent sales activity, yielded 3.8% increase statewide and a 3.3% increase in Cumberland County. During the last three months York County has recorded a 6.9% increase in median prices over 2009.
It is important, yet extremely difficult, to separate the market affects of the change in the mix of homes sales versus actual improvement in prices, especially on a macro level, whether it be statewide or by county. Each town and each local community include considerable variation.
According to NAR, the sales pace of all homes – single-family homes, townhomes and condos is at its lowest rate since NAR began tracking the figure in 1999. Sales of single-family homes, which account for a vast majority of all transactions, are at the lowest level since May 1995.
Existing home sales sank 27% in July, nearly twice as much as analysts had anticipated, to a seasonally adjusted annual rate of 3.83 million units.
Inventory has also continued to increase, rising 2.5% to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months.
A six-month of supply is considered normal.
Locally and nationally the next several months will be critical, as the housing market and the broader economy prove to be closely intertwined and is a poor sales month in July a harbinger of things to come over the balance of the year.
Maine sales statistics are based on MREIS reporting data.