California Logs Annual Sales Decline in August and Summer Amid Waning Affordability

Price Growth Has Flattened Out in Recent Months

By Andrew LePage Housing Affordability, Real Estate

California home sales fell year over year in August for the third time in four months as affordability constraints sidelined some would-be buyers. The Golden State’s median sale price rose nearly 7 percent year over year but held steady month to month, below June’s $500,000 all-time high. 

An estimated[1] 43,393 new and existing houses and condos sold statewide in August 2018 (Figure 1), up 4.7 percent from July 2018 and down 7.1 percent from August 2017, CoreLogic public records data show. The average change in sales between July and August since 2000 is a gain of 3.7 percent. Between this May and August, only July posted an annual sales gain (up 1.2 percent).

California Total August Home Sales

For summer overall – June through August – California home sales fell 5.5 percent year over year. When viewed by the state’s major regions, summer sales tended to decrease the most in higher-cost coastal areas, except on the Central Coast[2], which posted a relatively small annual decline of 1.9 percent (Figure 2). Among the state’s major regions, Southern California logged the largest year-over-year decline in summer 2018 sales, down 6.8 percent, followed by a 6.6 percent decrease in the San Francisco Bay, a 4.7 percent drop in the Sacramento region[3], and a 2.6 percent decline in the Central Valley[4]

Year Over Year Change in Summer

The median price paid for all new and existing houses and condos sold statewide in August 2018 was $495,000 (Figure 3), unchanged from July and up 6.5 percent from August 2017. The annual growth in the median sale price has held steady the past few months at about 6.5 percent, while the highest annual gain so far in 2018 was 9.5 percent in February. In nominal terms the median hit an all-time high of $500,000 this June. Adjusted for inflation, however, the median has not returned to its pre-housing-bust peak in March 2007, and this August’s median was 14.5 percent below that peak.    

California Median Sale Price

The decline in affordability that hampered sales this summer reflects the increase in both home prices and mortgage interest rates. While the state’s median sale price rose 6.5 percent year over year in August, the monthly principal-and-interest mortgage payment on that median-priced home jumped 15.3 percent because of a roughly 0.7 percentage-point gain in mortgage rates over that period.

August home sales highlights for Southern California and the San Francisco Bay Area:

In August, 22,261 new and existing houses and condos sold in the six-county Southern California[5] region, down 8.1 percent year over year. The August 2018 median sale price was $535,000, up 7.0 percent year over year.

In the nine-county San Francisco Bay Area[6], 7,659 new and existing houses and condos sold in August 2018, down 9.9 percent year over year. The median sale price in August 2018 was $830,000, up 12.2 percent year over year.

For the latest home sales report on Southern California and the San Francisco Bay Area

[1] Because of late data availability, August 2018 sales were not complete in some counties.

[2] Central Coast defined as Santa Barbara, San Luis Obispo, Monterey and Santa Cruz counties.

[3] Sacramento region defined as Sacramento, Placer, El Dorado and Yolo counties.

[4] Central Valley defined as Butte, Colusa, Fresno, Glenn, Kern, Kings, Madera, Merced, Sacramento, San Joaquin, Stanislaus, Sutter, Tehama, Tulare, Yolo, and Yuba counties.

[5] Southern California comprises San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties.

[6] The San Francisco Bay Area comprises Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties.

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