Maine home sales rise for third month, and prices inch closer to record high

Maine home sales increased for the third month in a row, a welcome sign that the inventory squeeze of the last few years might be lessening, but real estate experts say it’s a “drop in the bucket” when the industry needs a flood.

After more than two years of month-over-month decreases, sales reversed course in February. But as sales started to tick upward, prices also continued their steady rise.

Last month, the median sale price in Maine was $382,000, an almost 4% increase from April 2023 and just shy of the state’s record of $385,000, according to data released by the Maine Association of Realtors on Wednesday.

April saw 933 Maine homes change hands, a 17.5% increase from the year before.

Paul McKee, president of the Maine Association of Realtors, celebrated the trend and said he expects it to continue into the summer as the real estate market heads into its busiest months.

For-sale inventory increased 36% from April 2023, McKee said. With 3,114 active listings, April saw a roughly 3.3-month supply of for-sale single-family properties – an improvement over last year’s 2.9-month supply, he said. But it’s still far from perfect. A balanced market would be six months.

The increase in sales is a good sign, but Michael Navarro, co-owner of Elevate Maine, a Portland-based Keller Williams agency, said it’s not nearly enough to put downward pressure on prices.

“That’s 139 houses … 80,000 are needed,” he said, referencing an October report that found Maine needs 84,000 more houses by 2030 to accommodate its existing population and the people expected to move here.”We need way more than just the bump in current inventory.”

The recent increases aren’t the result of new construction, but rather, more people coming around to the idea of selling.

So many people refinanced when interest rates plummeted to record lows between 2% and 3% in 2021 that for the last few years, homeowners have been reluctant to sell, especially as rates shot back up again, capping last year at 8%.

Buyers paused and sellers “hunkered down,” said Michael Sosnowski, co-owner of Maine Home Connection.

“8% was a ridiculous psychological barrier,” he said. “People were not going to accept 8% when a few years ago they were getting less than 4%.”

At the end of last year, there was some hope that mortgage rates would drop to around 5%, but that hasn’t happened. Instead, they’ve settled between 6.5% and around 7%. Last week, the average 30-year mortgage rate was 7.02%, according to mortgage buyer Freddie Mac.

“People are coming out of that fog of the 2.5% ‘Oh my God I’m never going to sell my house,'” mentality, Navarro said.

Buyer demand has also largely rebounded.

Melanie Crane, co-owner of Elevate Maine, said it’s still common for reasonably priced houses, especially in desirable areas like Greater Portland, to receive multiple offers, many well over the asking price with inspections waived and anything else to sweeten the deal.

“It’s still a tough market for buyers,” Crane said.

But Sosnowski thinks the increase in inventory is helping buyers be more discerning.

Houses that are priced too high are sitting on the market for longer. Last month, houses in Maine sold in 14 days on average, up from nine days in April 2023.

“There have been more price reductions than I’ve seen in a long time,” Sosnowski said.

He doesn’t expect prices to plummet anytime soon. Like Navarro, Sosnowski noted the need for new construction, but he thinks the uptick in people selling will help slow the rate of increases in the coming months. He noted that in March, the median sale price was just $2,000 less than this month’s median.

Nationally, year-over-year sales rose by just over 1% in April, according to the National Association of Realtors, while the median sale price increased about 5.6% to $412,100.

Regionally, home sales in the Northeast dropped 4% and the median price increased 8.5% to $458,500.

The Maine Association of Realtors also looks at three-month data in county-by-county comparisons to get a larger sample size of sale transactions.

Sales increased by almost 11% between Feb. 1 and April 30 compared to the same period last year, while prices increased just shy of 9%.

Sales figures swung dramatically across the state. Waldo County saw a 17.4% decrease in sales, while Androscoggin County saw a 40% increase.

Sales prices also varied, though they were up across the board. Oxford was the only county to see a decrease in sales – a roughly 3.4% dip. Piscataquis saw the sharpest increase – a 46% hike from $159,900 to $234,000.

Cumberland County continues to be the most expensive in the state, with a median price of $540,000. York County also hit the $500,000 mark, an almost 14% increase from the same time last year.