Recent New England Housing Market Trends

Connecticut: Sales of single-family homes fell more than 20 percent in the third quarter compared with a year ago, after smaller double-digit declines in the preceding three quarters. The median price fell less than one percent, to $285,000. Third-quarter condominium sales fell 14 percent, although the median condo sales price rose 2.6 percent to $195,000. Home sales are forecast to decline each year from 2006 through 2010, with new home permits expected to drop by 14.5 percent this year and nine percent next year. This year, the median sales price is forecast to rise at a far slower pace than in recent years, to $321,900, up 5.5 percent. Through 2010, the forecast is for a 2.7 percent price increase per year, the fastest appreciation rate among the New England states.

Maine: The state has seen small home price declines this year, most recently a decline of a half-percentage point in the three-month period ended October 31. The median home sale price was $194,000, but prices vary widely locally — $255,000 in Cumberland County, compared with $84,725 in Aroostook County. Sales dropped nearly 16 percent in the most recent three-month period. Housing permits are expected to fall 15 percent this year, and drop a further 22 percent next year to a level not seen since 2000. Statewide, the median price is forecast to rise at an annual average of 1.3 percent through 2010, above the forecast for no significant change in housing prices for New England as a whole during the period.

Massachusetts: After posting the nation’s fastest price growth since 1980, Massachusetts has seen New England’s sharpest recent housing slump. An October decline in Massachusetts housing prices marked the sixth straight monthly drop, and sales have fallen in 20 of the past 21 months. For the first ten months of this year, single-family home sales fell 15 percent, and the median price fell 4.4 percent to $312,000. Condo sales have dropped 14 percent through October of this year, with the median price down 1.1 percent to $276,000. Single-family home prices are projected to continue falling moderately until the beginning of 2008, when they will be as much as seven percent to ten percent below historic peak levels reached in 2005. Prices are then expected to level off or rise slowly through 2010. From 2005 through 2010, Massachusetts is the only New England state forecast to see a price decline: an average 1.8 percent per year.

New Hampshire: The downturn in the state’s housing market has accelerated in recent months. Sales of homes excluding condominiums fell 19 percent in New Hampshire during the first ten months of this year, compared with the same period in 2005. The sharpest declines have occurred in pricey Rockingham and Hillsborough Counties. Statewide, the median price fell one percent in this year’s first ten months to $309,000, and sales volume fell by $800 million. Condo prices fell three percent through to $201,000, and condo sales dropped 18 percent. From 2005 through 2010, the median statewide home price is forecast to rise at an annual average of 1.2 percent, the fourth-fastest appreciation rate among the six New England states.

Rhode Island: The median single-family home price rose at an average annual rate of 14 percent from 2000 through 2005. But through the first nine months of this year, the median sales price rose one percent — to $285,000 — compared with the same period a year earlier. Sales of single-family homes fell nearly 15 percent through September. The inventory of unsold homes rose through the first nine months of the year, but has recently edged downward, suggesting the slump is easing. The state’s steepest recent sales declines have occurred in Newport and Washington Counties, both areas that attract second home vacation buyers from outside the state. The median home price is forecast to rise one percent next year, and at an annual average rate of eight-tenths of a percentage point from 2005 through 2010, the second-slowest rate in New England, after Massachusetts.

Vermont: The state experienced double-digit annual percentage increases in home prices over the past three years. In this year’s second quarter, Vermont was the only New England state to continue seeing such price increases. But the gains have recently slowed, with prices rising 13 percent in this year’s first quarter and 11.3 percent in the second quarter. From 2005 through 2010, home prices are projected to rise at an annual average rate of 2.6 percent in Vermont, behind only Connecticut’s 2.7 percent increase among New England states.

Sources: Associated Press, New England Economic Partnership, The Warren Group, Northern New England Real Estate Network, and state Realtors’ associations