The number of homes sold in the Baltimore metro area last month dropped sharply from January, but the decline likely doesn’t mean the market is taking a turn for the worse.
There were just under 1,500 closed sales in Baltimore and its neighboring counties during February, a 5.7 percent drop from the first month of the year, according to data released Monday by RealEstate Business Intelligence LLC.
It’s not unheard of for sales numbers to drop off between January and February. It’s happened a half-dozen times since the late-1990s. February is a short month, and fewer people look for homes during the holidays, suppressing its settlement numbers.
But, on average for the past decade, the number of homes sold in the region has increased 6.4 percent from January to February, according to RBI, the data arm of Metropolitan Regional Information Systems Inc., the region’s multiple-listing service.
The number sold was not only down on a monthly basis, it was also down 0.2 percent from February 2012. That gives last month the distinction of being the first since January 2012 to have a year-over-year decline in the number of homes sold.
It’s too soon to say whether February’s sagging sales numbers are a signal of deteriorating demand, according to RBI’s analysts, who produced the February home sales report in partnership with the Center for Regional Analysis at George Mason University.
The decline in sales on a month-over-month basis may represent a market stabilization after four months of double-digit annual sales growth, RBI said.
RBI President Jonathan Hill isn’t concerned.
“I expect that March is going to go much higher,” Hill said. The decline in February likely will mean healthy sales growth this month, he explained. “We expect 2013 to outperform 2012.”
The overall drop in February home sales reflects a contraction in the number of single-family, detached homes sold, RBI’s data show. There were 4.4 percent fewer detached homes sold last month than in February 2012. Although that’s a slight decline, since detached homes made up more than half of the region’s sales, they figure prominently into the overall market picture.
The condominium and townhouse markets remained strong. Year-over-year condo sales were up 6.6 percent; townhome sales were up 4.1 percent.
Those market segments continue to thrive because demand for homes is up among first-time buyers, many of whom must enter the market at lower price points, experts say. Townhomes are the least expensive type of home to buy in metro Baltimore.
The number of home sales contracts entered into during February closely tracked the number of closed sales during the month. Although a decline in new contracts sometimes signals that the number of closed sales in the coming months will be down, Hill is optimistic that spring will be a normal, vigorous selling season.
“I feel confident that we’ll push up to the 2,000 [closed sales] level, if not go beyond it” this month, Hill said. He also expects there will be more than 3,000 new contracts this month — a March benchmark reached last year for the first time since 2007.
Almost 2,500 new contracts were signed in February, down just a hair — 0.3 percent — from February 2012, according to RBI. As with the number of closed sales, February was the first month since January 2012 to show a year-over-year volume decline for new contracts.
The number of new contracts on single-family detached homes was down 3 percent from a year earlier. New contracts on townhomes were flat.
Condos were the sole segment to see growth, with a 13.3 percent jump in new contracts. But since condos only made up 11 percent of all contracts signed, their increase was not enough to stave off an overall dip in the number of contracts signed.
Despite slight annual declines in the number of sales and the number of contracts entered into during February, median sales prices were up on an annual basis in five of the jurisdictions that make up the metro region. Only Baltimore saw a price decline — of 21.3 percent — from February 2012.
Condos and townhomes saw more significant median price growth than detached homes. The median sales price of the condo segment grew $10,000 — 5.7 percent — from February 2012. Townhomes’ median price was up almost $7,000, about 4.5 percent, and single-family, detached homes’ median price rose about $7,500, just 2.9 percent, from a year earlier.
The continued price stability likely reflects the low inventory of homes on the market, according to RBI. There were about 9,400 homes listed for sale in Baltimore and its surrounding counties — Anne Arundel, Baltimore, Carroll, Harford and Howard — last month, 2,500 fewer than were available during February 2012.
Inventory of all types of homes is shrinking. There were about 20 percent fewer condos, townhomes and single-family homes listed last month than in the same month a year earlier.
David McIlvaine Sr., a past president of the Greater Baltimore Board of Realtors, said that inventory has become so tight in desirable areas that buyers are beginning to take drastic measures.
He represents one couple with two young children who have lost out on three Ellicott City homes they’ve made offers on, he said. They need more space and want to be in the Centennial High School district, but nothing satisfactory is on the market, McIlvaine said.
So this week, in a move he’s never tried, McIlvaine plans to post fliers around their desired neighborhood. The fliers will feature a picture of the family and a plea — “This is a family that wants to live in your neighborhood,” McIlvaine said.
He hopes the tactic will shake potential sellers loose by showing them that there are buyers out there desperate for a new home, he said.
“It’s gotten to that level,” McIlvaine said.
At the level of demand and supply in February, the available inventory would last about 61/2 months. The supply and demand of February 2012 would have lasted more than eight months, a time frame real estate agents are more comfortable with.
The small inventory has driven down the median number of days a home spends on the market to 63 — nine weeks. That’s 25 days shorter than the median days on market for homes sold in February 2012.
The lack of inventory also is getting buyers to agree to sales prices closer to the asking price, RBI said. A year ago, sellers received about 88 percent of their asking price. Last month, they got almost 92 percent.
McIlvaine hopes that if his flier tactic doesn’t work to get more homes on the market, rising home prices soon will have that effect.