The inventory of single family homes for sale in Massachusetts climbed 8.6% this month compared to year ago levels. This marked the second month in a row that the supply of single family homes for sale in MA rose compared to 2009 figures.
Housing analysts often cite a rising supply of homes for sale as a leading indicator of real estate market weakness. So this bears careful watching in coming months to see if a stronger trend towards increased inventory expresses itself.
However, it is important to note that September’s increase was still relatively modest and came against a backdrop of markedly lower housing inventory levels across the Commonwealth throughout most of 2010.
This, coupled with the fact that the Massachusetts economy is experiencing good job growth while many economists now are predicting that the national economy will avoid a double dip recession in 2010, may mean that September’s housing inventory rise will not necessarily prove a harbinger of worse times ahead for MA real estate.
8.6% rise in supply of homes for sale in MA
At 7.6 months of inventory, the supply of single family homes for sale in MA rose 8.6% this month compared to the 7 months’ worth of inventory seen back in September 2009.
Franklin increase larger
The increase in supply was more extreme in the Town of Franklin, MA where September single family home for sale inventory swelled by nearly 31%.
But even after rising to 5.5 months of supply (from 4.2 months this time last year) Franklin still maintains much less home for sale inventory than the overall Massachusetts market.
The regional market surrounding Franklin also saw a rise in the supply of homes for sale this month. The supply of single family homes for sale in the region rose 12.7% in September compared to year ago levels.
Broader view reassuring
Stepping back some to take in the larger picture makes current conditions look much more positive.
For most of 2010, Massachusetts has maintained strikingly less inventory than in 2008 or 2009:
The above graph shows the seasonal rise and fall in the supply of single family homes for sale in MA.
Each spring, the supply of homes swells as more sellers put their properties on the market.
Each winter, the supply of available homes dwindles as cold weather and the advent of the holiday season deter prospective home sellers from entering the market.
As you can plainly see from the graph above, the supply of homes for sale in MA in 2010 has been decidedly below the levels carried in 2009 and 2008.
This is good news for homes sellers as lower supply typically indicates a stronger market.
Watch how housing market performs this fall
As you may know by now, home sales in Massachusetts were weak in July and August.
Prospective home sellers and buyer alike should keep a close watch on real estate sales volume and housing inventory figures in Massachusetts over the coming months.
Those results should give us a good idea of how the MA real estate market will fare in 2011!
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