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New London County home sales were up dramatically in May compared with a year ago — the best month for total single-family sales in the past six years — but prices fell modestly.
According to new statistics released by Stonington-based Sound Investment Consultants, single-family sales rose nearly 23 percent in May compared with the same month last year. But the median price paid last month fell to $213,250, off nearly 2 percent compared with a year ago.
"The increase in the number of sales — that's encouraging," said Les Bray, principal of Sound Investment Consultants. "But I'm very wary going forward."
Continuing job erosions at the local casinos, possible negative effects from U.S. budget cutbacks related to sequestration and rising interest rates are among the storm clouds Bray sees on the horizon.
John Bolduc, chief executive of the Eastern Connecticut Association of Realtors, noted that the region's marginally lower prices in May fly in the face of national and statewide statistics showing a strong rebound in real estate. The Warren Group reported earlier this week that April prices statewide were up 9 percent compared with the same month last year.
"If the jobs aren't there ... you don't get new household creation," Bolduc said.
The Norwich-New London region reportedly lost about 3,800 jobs last year, and University of Connecticut economists' predictions are for another 1,000 or so to go by the wayside this year as well.
According to Bray's statistics, starter homes in the region continue to sell well. The inventory of homes up to $200,000 is at a fairly normal six-month level, which means it would take half a year to sell all the homes on the market.
On the other hand, higher-priced homes are a tough sell. It would take more than a year to sell all the homes on the market in the $300,000 to $400,000 range, according to inventory statistics, and the glut of million-dollar homes would take more than five years to move.
Condominiums are in a major slowdown as well. Though condo sales in New London County last month were up more than 20 percent from a year ago, the median sale price fell to $115,000. That's off 27 percent from last May's figure.
On a rolling yearlong basis, condo sales are off 9 percent and the median price — at $128,000 — is down by a similar percentage.
Bolduc said condo sales have been negatively affected by new Federal Housing Administration rules that have left most condominium associations as unapproved for loans. So condo owners, he said, largely must look to conventional financing, which requires a 20 percent down payment — not easy to swing for the typical first-time buyer.
Bray added that with the typical price point on single-family sales approaching the cost of a condo, more people are opting to start with a house.
"Declining prices on the single-family side are rubbing condo sales activity pretty hard," Bray said.
Single-family sales: 242, up 22.8 percent
Single-family median price: $213,250, down 1.7 percent
Condominium sales: 35, up 20.7 percent
Condominium median price: $115,000, down 27 percent