After a record-setting 2016, and strong sales in January, Rhode Island house sales fell by nearly 7% in February, a change attributed to the declining number of houses for sale.
In February, the median house price jumped by more than 6%, to $231,000, but there were just 554 single-family houses sold, down 6.89% from February 2016, when there were 595 sales.
Real estate sales have been "hampered by declining inventory," the Rhode Island Association of Realtors explained in its February sales report, scheduled for release Wednesday. In February, house listings were down 20%, compared with February 2016, and "with the exception of February 2016, inventory has slipped every month for the past 26 months."
By mid-March, there was a 3.4-month supply of homes on the market, "giving sellers a significant advantage," the association added. A six-month supply of homes is considered to be the level that supports a "healthy" balance between supply and demand.
James DeRentis, an agent with Residential Properties Ltd., said multiple offers are now routine for houses in good shape "in any neighborhood where you've got an attractive price point."
On Tuesday, he said, he went to Rumford to look at a newly listed two-bedroom ranch; the first showing appointment was at 3:30 p.m. At 4 p.m., when he arrived, "15 people were waiting to see it," DeRentis said. Attractive listings "are gone in a matter of hours, not days," he added.
Even at the high end of the market, "inventory is the biggest problem right now," said John Hodnett, principal broker/owner of Lila Delman Real Estate International. Hodnett said he recently worked with buyers who can spend up to $2 million and want to buy in South Kingstown or Narragansett. Four years ago, there would have been 20 houses to show them, he said, but this year, there were just five.
Similar trends were reported Tuesday in Massachusetts. "Plummeting inventory caused single-family closed sales to dip year-over-year in February, as prices continued to rise," the Massachusetts Association of Realtors announced. In Massachusetts, house sales fell by 11% in February, while the median house price went up to $330,000, an increase of nearly 7%.
In Massachusetts, housing inventory was down by nearly 35% in February, and a 2.3-month supply of single-family houses was available for sale, the MAR added.
"We're at the lowest inventory we've seen since MAR began recording the data in 2004," said MAR president Paul Yorkis.
In Rhode Island, single-family house sales were up by 21% in January, a brisk start after 2016, which itself was a record year for real estate sales. Last year, there were 11,038 single-family house sales in Rhode Island, up 12.4% from 2015, and 1,013 more than the previous record, set in 2004.
"The tough buying market is characterized by competition driven by low inventory and challenges for first-time home buyers as prices outpace income growth," Cheryl Young, a senior economist with Trulia, reported Tuesday.
"It's basic economics. When there's a good deal of demand but supply is low, prices go up," said RIAR president Brenda L. Marchwicki. "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."
