Warwick, RI – March 29, 2017…The latest sales data released by the Rhode Island Association of Realtors reflects a sharp drop in sales heading into the spring market. Closing activity of single-family homes dropped 6.9 percent in February compared to 12 months earlier. This stands in stark contrast to data released by the National Association of Realtors recently which portrayed a 5.8 percent increase in February’s single-family home sales nationwide.
Rhode Island sales were hampered by declining inventory. There were 19.9 percent fewer single-family homes for sale last month than there were a year earlier and with the exception of February, 2016, inventory has slipped every month for the past 26 months. As of mid-March, there was a 3.4-month supply of homes on the market, giving sellers a significant advantage. A six-month supply is considered to be a market balanced between buyers and sellers.
The diminishing supply of homes for sale was good news for those who sold last month – the median sales price rose 6.3 percent to $231,000, $2000 above the national median sales price.
Condominium sales also declined last month, though less severely. Completed sales fell just .93 percent year-over-year while the supply of condos on the market dropped eight percent from the prior year. The market saw a 10.5 percent gain in median sales price.
“It’s basic economics. When there’s a good deal of demand but supply is low, prices go up. That’s what we’re experiencing in Rhode Island’s housing market right now. That’s great news for homeowners whose equity is rising, but it’s not good for buyers who have limited choices and stiff competition when they do find a home that they like,” said Brenda Marchwicki, President of the Rhode Island Association of Realtors.
Multifamily property sales were the exception in February, with sales up 4.6 percent despite a similar downward trend in inventory. The number of multifamily properties available for sale last month fell 20 percent from February of 2016 and the median sales price rose nine percent.
“Sales in the multifamily market are being lifted up by investors looking to capitalize on the strong rental market. One of the downsides of this is that investors are typically in a better financial position than first-time buyers to purchase these properties. That leaves the entry level market with even less options. It’s really important today that buyers bring their A game…be prequalified, know their budget, and be ready to move on a property if an opportunity presents itself,” commented Marchwicki.
Pending sales – those under contract but not yet sold in February – fell in all three categories, a sign that sales will likely continue to decline in the coming months.