Regional Spotlight—Sustained job and income growth gave home buyers the confidence in July to jump into the California housing market, pushing home sales to their highest level in nearly three years, according to the California Association of REALTORS®.Home sales have risen year over year for six straight months.
Home sales remained above the 400,000 mark in July for the fourth consecutive month and rose to highest level since October 2012. Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 449,530 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 2015 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 up 2.7 percent from the revised 437,680 level in June and 12.7 percent compared with home sales in July 2014 of a revised 398,980. The year-to-year change was the highest since July 2009 and significantly higher than the 6-month average increase of 6 percent observed from January 2015-June 2015.
“While July home sales rose at the statewide level, the market is still constrained by low housing affordability and a tight supply in areas where job growth is robust, such as San Francisco and San Jose,” says C.A.R. President Chris Kutzkey. “Neighboring regions such as Napa, Solano, and Sonoma are experiencing strong sales due to their affordability and proximity to job centers. However, housing affordability could become a bigger issue in these areas if housing demand continues to grow but supply can’t keep pace.”
The median price of an existing, single-family detached California home dipped 0.3 percent in July to $488,260 from $489,640 in June. July’s median price was 5.4 percent higher than the revised $463,330 recorded in July 2014. 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.
“Home price appreciation has been moderating since the second half of 2013,” says C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The recent monthly dip in the statewide median price, however, reflects the ongoing differential in sales between the coastal and inland regions. The Central Valley has been experiencing sales growth in the double-digits over the last three months, while Bay Area home sales have grown half that rate during the same time frame. As a result, more lower-priced properties have sold in recent months, and this change in the mix of sales is keeping the increases in the statewide median price subdued.”
Other key points from C.A.R.’s July 2015 resale housing report include:
- While sales continued to improve from last year at the state level, the number of active listings dropped modestly from last year. Statewide, active listings increased 3.3 percent from June but dropped 4.5 percent from July a year ago. Regionally, the number of active listings increased 1.7 percent in the Central Valley but declined 4.1 percent in Southern California, and 13.3 percent in the Bay Area.
- The July Unsold Inventory Index was unchanged from June, remaining at 3.3 months, but down from 3.8 months in July 2014. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered typical in a normal market.
- The median number of days it took to sell a single-family home rose slightly in July to 35.1 days compared with 33.4 days in June but was down slightly from 35.9 days in July 2014.
- According to C.A.R.’s newest housing market indicator which measures the sales-to-list price ratio, properties are again generally selling below the list price, except in the San Francisco Bay Area, where a lack of homes for sale is pushing sales prices higher than original asking prices. The statewide measure suggests that homes are selling at a median of 98.8 percent of the list price, slightly up from 98.5 percent at the same time last year. The Bay Area is the only region where homes are selling above original list prices due to constrained supply with a ratio of 105.2 percent, up from 103.4 percent a year ago, but down from 106.3 percent in June.
- The average price per square foot for an existing single-family home was $228 in July 2015, up from $226 in June and $220 in July 2014. Price per square foot at the state level has been on an upward trend since early 2012, and has been rising on a year-over-year basis for 42 consecutive months. In recent months, however, the growth rate in price per square foot has slowed down as home prices level off. San Francisco County had the highest price per square foot in July at $804/sq. ft., followed by San Mateo ($748/sq. ft.), and Santa Clara ($574/sq. ft.). The three counties with the lowest price per square foot in July were Siskiyou ($112/sq. ft.), Glenn ($118/sq. ft.), and Kings ($119/sq. ft.).
Mortgage rates increased in July, with the 30-year, fixed-mortgage interest rate averaging 4.05 percent, up from 3.98 percent in June and 4.13 percent in July 2014, according to Freddie Mac. Adjustable-mortgage interest rates ticked down in July, averaging 2.52 percent, down slightly from 2.54 in June and 2.39 percent in July 2014.
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