Fewer Owners Deciding To Sell: Inventory Levels Growing Healthier

RISMEDIA, Jan. 26, 2007-(MCT)-For years, a shortage of houses for sale in Greater Hartford helped create a frenzied housing market where multiple buyers sometimes competed for the same house.

Last year the opposite was true as the inventory of single-family homes for sale inched toward record-high levels.

Now, a new year-end housing report shows that inventory levels, though still higher than the previous year, have dropped back down to healthier levels.

In December, there were 4,489 single-family houses for sale in the area, a 16% increase from the 3,857 houses for sale in December 2005, according to a report released this week by the Greater Hartford Association of Realtors.

The number of homes for sale peaked in September, when 5,527 single-family houses were listed for sale.

"This means that fewer people are making the decision to sell, which is a good thing if you are trying to sell your house because it means there is less competition," said Ron Van Winkle, a West Hartford economist.

"But there is still six months of inventory on the market, which is a buyer's market. And come spring, those inventory levels could pop up again."

The inventory level is important because, combined with the average number of days that a house is listed for sale, it provides a prime indicator of the health of the housing market.

Through most of last year, inventory levels increased dramatically. In April, the single-family housing inventory was 40% higher than during the same month in 2005.

At the same time, the average number of days on the market was also increasing, by about 15% to 20%.

"We all know the market is in a slump, so the question becomes: Is it getting worse or better?" said Steven P. Lanza, executive editor of The Connecticut Economy, the University of Connecticut's economic publication.

"What we can say from December is that things probably aren't getting any worse, nor are they getting better."

The single-family home sales report from the Greater Hartford Association of Realtors, which covers more than 50 towns in the region, also shows:

* The median sales price-meaning that half of the purchase prices are above, and half below-dropped 2% in December, from $255,000 in December 2005 to $250,000 in December 2006. For the complete year, median sales prices increased by 2%, from $249,900 to $255,000.

* The number of closed sales in the region continued to drop in December, down 13.74% from 844 sales in December 2005 to 728 in December 2006. For the entire year, sales dropped 11.47%, from 11,941 in 2005 to 10,571 in 2006.

* Houses are still taking longer to sell than they did a year ago. In December, the average number of days on the market was 63, an 18.87% increase from December 2005, when the average was 53.

For the entire year, the average number of days on the market increased 16.67%, from 48 days in 2005 to 56 days in 2006.

The association's statistics include most single-family home resales, some new construction and some for-sale-by-owner transactions.

"There's not a huge amount of good news here, but also, there's not a huge amount of news to make you think that things are getting really bad really fast here," Lanza said.

Economists said mortgage interest rates, which have dropped back down to about 6.2% from about 6.5% in the summer, will continue to help shape the housing market.

"Mortgage rates have just shown incredible resilience," Lanza said. "The rates are up a little bit the past few weeks, but still remain relatively low, which will help support the housing market this year."

The report from the association also showed:

Of the 728 single-family homes sold in Greater Hartford last month, 2.4% sold for less than $100,000, 24.6% sold between $100,000 and $199,999, 42.2% were between $200,000 and $299,999, 23.3% fell in the $300,000 to $499,999 range, and 8.3% sold for $500,000 or more.

And condominium prices ended the year ahead of 2005. The median condominium sales price for 2006 increased by 7.32%, to $170,000 (compared with $158,400 for 2005), and by 2.72% last month, to $166,400 (compared with $162,000 for December 2005.) From December 2005 to December 2006, condominium inventory increased by 36.60%, from 981 to 1,340 units.

Overall, closed condominium sales for the year decreased 5.61%, from 3,990 to 3,766 units, and the average number of days that a condo was on the market increased 22.5%, from 40 to 49.

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