Maine’s real estate market has felt like a broken record for months: declining sales, skyrocketing prices, high demand and paltry inventory.
May home sales figures released Tuesday by the Maine Association of Realtors tell a similar story, but realtors say a new chapter is about to begin.
Interest rates are climbing, and while listings are nudging upward, there has been no significant freeing up of the state’s tight inventory, particularly in the “affordable” range below $300,000.
The cooling effect has already begun, according to some real estate professionals.
Sales in Maine declined by about 12 percent last month over a year earlier, while the median sales price increased by 15 percent.
May marked the 11th consecutive month of year-over-year sales declines.
The statewide median sales price for homes sold last month was $350,000. The median indicates that half of the homes sold for more money and half sold for less.
Sales for the past three months have been historically low, but there have been “small gains” in the number of homes for sale across the state, said Madeleine Hill, president of the association and designated broker at Roxanne York Real Estate in Harpswell.
“Some of that gain is our typical spring home selling seasonal increase, but we’re also seeing home buying demand impacted by rising mortgage interest rates and home price appreciation,” she said.
Hill isn’t quite ready to declare a market change, but she’s watching closely.
“As sellers and buyers adjust, time will tell if we are transitioning to a more balanced market with slower price growth and less buyer competition for for-sale inventory,” she said.
Interest rates have more than bounced back from their pandemic lows.
According to Freddie Mac, the average rate included in buyer contracts for a 30-year, conventional fixed-rate mortgage was 5.23 percent in May, up from 4.98 percent in April. The average rate across 2021 was 2.96 percent, the organization said.
Mortgage rates have continued to climb. Last week, in the biggest one-week jump in decades, 30-year fixed-rate mortgages climbed to 5.78 percent, according to Freddie Mac. That’s a level not seen since 2008, and realtors estimate that will slow down buying substantially.
In Cumberland County, the median price was $510,000 for the three-month period ending May 31 – an increase of 17.6 percent from the same period a year earlier, and the highest median price in the state.
The Realtors Association also looks at three-month data for county-by-county comparisons to get a larger sample size of sale transactions.
Hancock County saw the largest decrease in sales. Between the start of March and the end of May 2021, Hancock County realtors sold 242 homes. In the same three-month period this year, they sold 139, a 42.6 percent decrease.
Aroostook County saw the most dramatic year-over-year price increase for the three months — 43.5 percent — but with the average price at $155,000 the county still has the lowest-priced real estate in the state.
Nationally, home sales have essentially returned to the pre-pandemic levels after “two years of gangbuster performance,” said Lawrence Yun, chief economist for the National Association of Realtors.
Single-family home sales declined 3.6 percent from April of this year and 7.7 percent from May 2021.
While sales have fallen for the last four months, prices are still on the rise.
The median national home price was $414,200, a 14.6 percent increase from last year. It marks the first time that the median price for existing homes has surpassed $400,000, according to the National Association of Realtors.
In the Northeast, sales in May were slightly higher than the month before, with a 1.5 percent increase, but were 9.3 percent lower than in May 2021.
The median home price was $409,700, a 6.7 percent increase from a year ago.
Yun said further sales declines, spurred in part by an increase in mortgage rates in June, should be expected in the coming months.
That said, homes priced “appropriately” are still selling quickly and Yun said inventory levels need to almost double before home price appreciation cools considerably and buyers have more options.