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Strong Finish to Golden State Summer Home Sales

Job Growth, Low Mortgage Rates Help Fuel Demand

Andrew LePage    |    Housing Trends

California home sales in September dipped less than usual from August and rose nearly 13 percent from a year earlier, capping the Golden State’s highest summertime home sales in nine years.

An estimated 40,990 new and existing houses and condominiums sold in California in September 2015, down 0.8 percent from 41,328 sales in August 2015 and up 12.7 percent from 36,385 sales in September 2014, according to CoreLogic public records data. On average, sales have fallen 9.2 percent between August and September since 1988, when data for this report begin.

September 2015 sales were the highest for a September since 2009, when 41,526 homes sold, but remained 8.7 percent below the September average of 44,872.

Sales this summer – June through September – totaled 175,397, up 13.6 percent year over year and the highest for that four-month period since the summer of 2006, when 205,214 homes sold.

Multiple forces have fueled housing demand this year, including job growth, higher consumer confidence, low mortgage interest rates and some buyers’ concern that mortgage rates could rise in the second half of this year. The state’s Employment Development Department reports non-farm positions rose 2.8 percent – an increase of more than 443,000 jobs – between September 2014 and September 2015. California’s unemployment rate dropped to 5.9 percent in September, marking its first dip below 6.0 percent since November 2007, the dawn of the last recession, the EDD reported.

The combination of rising demand and a relatively thin supply of homes for sale has kept upward pressure on California home prices, which have been rising on a year-over-year basis for around three and a half years. The median price paid for a California home in September 2015 was $406,000, down 0.6 percent from $408,500 in August and up 5.5 percent from $385,000 in September 2014. That’s roughly in line with the most recent results from the CoreLogic Home Price Index (HPI), which shows California home values rose 6.8 percent year over year in August.

So far this year, California’s median sale price was highest in June and July, when it was $415,000 – the highest for any month since November 2007, when the median was also $415,000.

The September 2015 median sale price was 16.6 percent lower than California’s peak $487,000 median in May 2007. September 2015 marked the 43rd consecutive month in which the state's median sale price has increased on a year-over-year basis. The peak year-over-year median price gain during that period was 29.8 percent in June 2013. For the past 16 months (since June 2014) the year-over-year increases in the state’s median sale price have been single-digit.

California’s lower-cost homes have seen the greatest price gains in recent months. An analysis of the CoreLogic HPI by home-price tiers shows that, in August, low-to-mid-priced homes experienced an 8.6 percent year-over-year gain, compared with a 6.8 percent annual gain for high-priced homes. Low- to mid-priced homes are defined as being priced at between 75 and 100 percent of the statewide median, while high-priced homes are those priced at more than 125 percent of the median.

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