California housing shortage cuts into demand
May 21, 2017
Following a strong first quarter start, California home sales lost momentum in April, while the median home price accelerated to a near-10-year high, the California Association of Realtors (CAR) recently announced.
Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 13th consecutive month and totaled a seasonally adjusted annualized rate of 406,300 units in April, according to information collected by CAR from more than 90 local Realtor associations and MLSs statewide.
The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The April figure was down 2.4 percent from the 416,110 level in March and down 1.7 percent compared with home sales in April 2016.
"With pending home sales slowing over the past three months, April's sales decline was not a surprise," CAR President Geoff McIntosh said. "Some sales that took place in the first quarter were likely pulled forward as homebuyers took advantage of the favorable interest rate environment and decided to purchase now before rates increase. Moving forward, the housing market may temper further as interest rates inch up and the supply of available homes for sale tightens."
The statewide median price stayed above the $500,000 mark for the second straight month and reached the highest level since August 2007.
The median price was up 3.7 percent from $517,490 in March to reach $536,750 in April, and was 5.4 percent higher than the $509,240 recorded in April 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.
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"California's median home price has been on an upward trend on an annual basis since March 2012 and is now at the highest in nearly 10 years," said CAR Senior Vice President and Chief Economist Leslie Appleton-Young. "The yearly price gains will most likely persist through the remainder of the home-buying season, further exacerbating an already-low housing affordability situation. This could have an adverse effect on home sales in the upcoming months, especially since interest rates are expected to rise in the second half of the year."
Other key points from CAR's April 2017 resale housing report include:
The April sales decline was broad based as every major region in the state posted a decline over the previous year. Southern California dropped the most with a 6.5 percent decline in existing home sales from last April.
After a strong March showing in sales, the Bay Area housing market dipped again as housing supply and affordability continued to constrain sales in the region. Overall sales in the Bay Area declined 4.3 percent over the same period last year. Seven of the nine counties in the region performed worse than last April.
New statewide active listings declined for the 22nd month in April, falling 10.5 percent from a year ago.
The April decline in sales relieved housing inventory conditions slightly, with CAR's Unsold Inventory Index edging up from 3 months in March to 3.3 months in April. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate. The index stood at 3.5 months in April 2016.
At the county level, 35 of 51 reported counties experienced a drop in the unsold inventory index compared to a year ago. San Francisco had the lowest inventory (1.8 months), followed by Santa Clara, San Mateo, and Alameda (all at 2.0 months), which are all in the Bay Area.
The median number of days it took to sell a single-family home dipped from 26.7 days in March to 24.1 days in April and was down from 27.8 days in April 2016.
The average price per square foot for an existing, single-family home statewide was $258 in April, $252 in March, and $244 in April 2016.
San Mateo County had the highest price per square foot in April at $890/sq. ft., followed by San Francisco ($887/sq. ft.), and Santa Clara ($698/sq. ft.). Counties with the lowest price per square foot in April included Lassen ($119/sq. ft.), Siskiyou ($119/sq. ft.), and Tulare ($132/sq. ft.).
Mortgage rates have fallen since early this year. The 30-year, fixed-mortgage interest rate averaged 4.05 percent in April, down from 4.20 percent in March but up from 3.69 percent in April 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates dipped in April to an average of 3.15 percent, from 3.21 percent in March but was up from 2.90 percent in April 2016.
This article was provided by the California Association of Realtors.