Homebuyers looking to purchase condos in the Boston area may have a hard time finding units available as the area's housing market continues to heat up this winter.

Downtown Boston's available condo inventory totaled 360 units as of Dec. 31, down 46% from the prior quarter and 41% from the end of 2020, representing the city's largest annual decline in inventory in eight years, according to a Douglas Elliman Real Estate report released Thursday.

"What stood out to me the most was how listing inventory collapsed," Douglas Elliman Northeast Region President Richard Ferrari told Bisnow. "There’s so much less product for sale than there was a year ago. That’s the amazing thing. To have inventory down 40% is something that’s once in a lifetime. This doesn't happen, but it did this year."

The report's definition of Downtown Boston encompasses 11 neighborhoods in the city: Back Bay, Beacon Hill, Charlestown, Fenway, Midtown, North End, Seaport, South Boston, South End, Waterfront and West End.

The neighborhoods with the sharpest inventory decline, according to the report, were Charlestown, with a 64% year-over-year drop; North End, with a 55% drop; South Boston, with a 55% drop; Fenway, with a 53% drop; Waterfront, with a 47% drop; and Back Bay, with a 45% drop.

The drop in inventory came as 771 condo sales closed in Downtown Boston last quarter, according to the report, up 17% from Q4 2020. The average condo sale price totaled $1.4M, up 13% from the prior quarter and 12% from Q4 2020.

The Seaport had the highest average condo sale price of any Boston neighborhood in Q4 at $1.99M, though it dropped 7.6% from the prior quarter, according to the report. The neighborhoods with the highest Q4 increases in condo sale price were Back Bay, with a 28.5% increase over Q3, and the North End, with a 26% increase.

The market for suburban homes has been hot throughout the pandemic, but Boston's condo market began to heat up in late 2020 and early 2021 as restrictions loosened, vaccines were distributed and the appeal of living in the city returned, Ferrari said.

"When Covid hit, the urban markets were stagnant, there wasn't much activity," he said. "The suburban, country and second-home markets started to boom in April 2020. The urban markets didn't start until September or October of 2020, and then in 2021, they were increasing and getting busier. So now in the last quarter of 2021, urban markets are full steam ahead, and Boston is leading the charge."

Ferrari said that as available inventory continues to tighten in Boston, he expects to see sales volume drop in the short term and prices to increase. But that price bump could lead to more long-term inventory growth as sellers put properties on the market and developers build new projects.

"We're dealing with bidding wars," Ferrari said. "You're dealing with more than three or four buyers for almost everything for sale in downtown Boston now that’s priced remotely correctly. But the good news is as prices go up, more inventory will come on."

Condo market inventory is also tightening in many nearby communities outside of Boston, according to a separate report released this week by the Greater Boston Association of Realtors.

The GBAR report found that the number of condo units actively on the market last quarter in Somerville was 144, down 30.8% from Q4 2020. Cambridge's active inventory of 142 units was down 38.8% year-over-year. Brookline's inventory of 121 units was down 38.1%, and Newton's inventory of 65 units was down 57%.

Condo sales across Greater Boston increased in price 6.6% over the course of 2021 to an average of $625K, a new record, according to GBAR data first reported by the Boston Globe. The 2021 price increase for single-family homes also hit a new record at 10.5%, according to the report, and the overall number of homes sold across the region set a new record.