Northeast home sales overcast but clearing

Excess inventory and a sluggish employment picture left the real estate market in the Northeast under overcast skies but forecasters see a break in the clouds on the horizon.
Slow building growth in the Northeast means the area's supply and demand "are reasonably in balance," says Bernard Markstein, senior economist with the National Association of Home Builders.
The Northeast has enjoyed "higher prices than the rest of the country," particularly New York, Boston and some areas of New Jersey, says Yun. A median priced home runs about $274,600 -- about 25 percent higher than the national median -- according to National Association of Realtors (NAR) data.
Even in those places, some excess inventory has left the market "a little soft" says Markstein.
"Things look sluggish, so the recovery will be a little slow," he says. "Job growth is below the national average."
At the start of 2007, inventory is about on par with the rest of the country, which means that at the current sales rate it would take roughly 7.2 months to sell all the homes currently on the market, says Lawrence Yun, a senior economist for the NAR.
And while that's high (anything over a six month supply signals a buyer's market), it's "not anywhere near alarming," Yun says. In addition, sales rates have also slowed. His prediction: a slower recovery than the nation as a whole.
Homeowners and sellers will likely enjoy a good forecast this year. While prices in the region were down about 5 percent on average for 2006, that's "at or near an end right now," By the end of 2007, the region should see average gains of 1 to 3 percent in value, matching the national trend.
Some areas are already looking up.
In Providence, "our market began to correct in August of 2005," says Ron Phipps, broker for Phipps Realty in Warwick, RI. Sales rates started to drop off last year "because buyers knew it was a buyer's market and sellers refused to acknowledge that," he says.
"The funny thing about that is it's not a huge swing from where they were," Phipps says.
In the Northeast, "most of the states are seeing a rebound of sales rates," says Ken Libby, a regional vice president for the NAR in New England.
In the region, "Boston had the toughest go of it during the summer," Libby says. "A significant increase in inventory" coupled with job pressure. But the market "has flattened out" now, he says.
Over 2006 "prices softened a little," in some areas of New England, says Libby, also the broker/owner of Stowe Realty in Stowe, Vt. Prices were up in Massachusetts, Connecticut, New Hampshire and Vermont just under or above 2 percent, he says.
He expects that sales in the region will increase. "This year, I think the prices have adjusted," says Libby. "I think the new listings coming on the market reflect the adjustment. I think we'll have an average year, if not above average."

Posted 8 March 2007 Dana Dratch Bankrate.com