California Starts Second Half of 2017 with Slow Growth in Home Sales

LOS ANGELES, Aug. 16, 2017 /PRNewswire/ -- Despite tight supply constraints and worsened affordability, California's housing market remained solid in July as it experienced gains year-over-year in both sales and price, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 16th consecutive month and totaled a seasonally adjusted annualized rate of 421,460 units in July, according to information collected by C.A.R. 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 July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The July figure was down 1.1 percent from the revised 443,120 level in June but up 0.9 percent compared with home sales in July 2016 of a revised 417,680. Year-to-date sales are running 2.9 percent ahead of last year's pace, but are beginning to slow.

"As we enter the second half of the year, we are likely to see some slowdown in sales that extends beyond the typical seasonality change," said C.A.R. President Geoff McIntosh.  "While the rate of closed sales indicates that California's housing market has continued to move forward, tight supply continued to push up prices and lower affordability, which can ultimately undermine the housing market by putting homeownership out of reach for too many households."

Although declining to its lowest point since April 2017, the statewide median price remained above the $500,000 mark for the fifth straight month and remained close to the most-recent peak. The median price declined 1.1 percent from a revised $555,410 in June to $549,460 in July, but was up 7.4 percent compared with the revised $511,420 recorded in July 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.

"Despite a dip from the recent record high in June, the statewide median price continued to rise at a high single-digit rate in July, and was growing at the second fastest pace in 2017," said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young.  "Tight inventory remained the fuel to upward momentum in home prices, particularly in the Bay Area and other high-priced markets. With supply expected to be tight for the rest of the year, home prices should grow moderately in the next few months."

Other key points from C.A.R.'s July 2017 resale housing report include:

• The Central Valley posted both the fastest and most broad-based increase. Overall, the Central Valley experienced a 1.7 percent increase in July, with Kings (+52.2 percent), Madera (+39.7 percent), and Glenn (+23.5 percent) posting double-digit gains. Fresno, Sacramento, Merced, Placer, and Stanislaus also experienced an uptick in closed sales in July.
• July's 7.4 percent increase in home prices was the second fastest this year, and faster than any month last year except January suggesting that affordability is not only deteriorating, but deteriorating at a faster rate.
• Inventory is poised to continue to constrain the housing market as C.A.R.'s Unsold Inventory Index remained tight, despite an increase from 2.7 months in June to 3.2 months in July. The increase should not be interpreted as anything other than a seasonal slowdown after the peak summer months. 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 3.6 months in July 2016.
• The median number of days it took to sell a single-family home was essentially flat at 22.8 days compared with 22.4 days in June but was down from 28 days in July 2016.
• C.A.R.'s sales-to-list price ratio* was 100 percent of listing prices statewide in July, 100 percent in June, and 99.2 percent in July 2016. Regionally, San Francisco had the highest sales-to-list price ratio at 118.6 percent and Mariposa had the lowest at 93.3 percent.
• The average price per square foot** for an existing, single-family home statewide was $270 in July, $269 in June, and $251 in July 2016.
• San Mateo had the highest price per square foot in July at $898/sq. ft., followed by San Francisco ($893/sq. ft.), and Santa Clara ($672/sq. ft.). Counties with the lowest price per square foot in July included Kern ($135/sq.ft.), Lassen ($136/sq. ft.), Siskiyou ($142/sq. ft.), and Del Norte ($142/sq. ft.).
• Mortgage rates continued to go lower in July as the 30-year, fixed-mortgage interest rate averaged 3.90 percent in July, down from 4.01 percent in June but up from 3.57 percent in July 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates edged up in July to an average of 3.14 percent from 3.12 percent in June and was up from 2.78 percent in July 2016.

Graphics (click links to open):

• Calif. home sales highest in four years.
• Calif. median home price continues to grow year-over-year
• Sales improved in mid and high-priced markets
• Calif. price per square foot highest since 2007.
• Calif. sales to list price ratio

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.

**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 39 counties.

Leading the way...® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

July 2017 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

r=revised
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July 2017 County Unsold Inventory and Time on Market
(Regional and condo sales data not seasonally adjusted)

r=revised
NA=not available

SOURCE CALIFORNIA ASSOCIATION OF REALTORS