California Home Sales Fall Year Over Year for Fourth Consecutive Month in November

Slowdown has Impacted High-End Market, Too, in Recent Months

By Andrew LePage Housing Affordability, Real Estate

Golden State home sales fell on a year-over-year basis for the fourth consecutive month in November, with declines across the price spectrum – including $1 million-plus deals – and all major regions of the state. With inventory higher and some potential buyers priced out or simply unwilling to buy, the annual growth rate for the state’s median sale price in November was less than half the year-earlier level.

California Total November Home Sales

An estimated[1] 33,654 new and existing houses and condos sold statewide in November 2018 (Figure 1), down 12.2 percent from October 2018 and down 12.1 percent from November 2017, CoreLogic public records data show. Sales typically fall between October and November and since 2000 the average change between those two months is a decline of 9.4 percent. Sales have fallen year over year in six out of the last seven months, including annual declines of 9.2 percent last June, 7.0 percent in August, 17.2 percent in September and 6.2 percent in October.

November sales below $500,000 fell 16.9 percent year over year, while sales of $500,000 or more declined 8.4 percent and $1 million-plus deals fell 9.6 percent compared with November 2017. Sales of $1 million or more during the September-through-November period fell 3.8 percent from the same period in 2017, while multi-million-dollar sales fell 4.5 percent over the same period.

The sales slowdown, which began during the heart of the 2018 Spring-Summer homebuying season, reflects then-rising mortgage rates that worsened affordability, as well as a shift in buyer psychology that left some would-be buyers waiting to see if the market was nearing a peak, after which buying conditions might improve. In recent months, stock market volatility could have contributed to the high-end pullback. Market corrections can spook high-end buyers and leave some with inadequate funds to cover down payment and closings costs.

California Monthly Median Sale Price

The median price paid for all new and existing houses and condos sold statewide in November 2018 was $490,000 (Figure 2), up 1.0 percent from October and up 4.3 percent from November 2017. The November median’s 4.3 percent annual gain was the second lowest for 2018, behind a 4.1 percent increase in September. In November 2017 the median’s annual gain was 9.3 percent.

In nominal terms California’s median sale price hit an all-time high of $500,000 in June 2018. Adjusted for inflation, however, the median has not returned to its pre-housing-bust peak in March 2007, and the November 2018 median was 15.1 percent below that peak.    

Year Over Year Change in California Median

The 4.3 percent annual gain in the November 2018 median sale price (Figure 3) understates the affordability challenge many would-be buyers face. Compared with November 2017, the monthly principal-and-interest mortgage payment on the state’s median-priced home in November 2018 was up 16.6 percent because of a nearly one percentage-point gain in mortgage rates over the prior year.

Other November 2018 highlights:

  • In the six-county Southern California region, 17,170 new and existing houses and condos sold in November, down 12.3 percent year over year. November’s median sale price was $522,750, up 3.5 percent year over year.
  • In the nine-county San Francisco Bay Area, 6,147 new and existing houses and condos sold in November 2018, down 15.2 percent year over year. November’s median sale price was $815,000, up 3.8 percent year over year.
  • Some of the state’s more affordable counties logged relatively small annual declines in total home sales in November 2018. Some examples: Sacramento (-8.9 percent), Solano (-7.7 percent), Riverside (-6.4 percent), Tulare (-3.0 percent), and Kern (-0.8 percent). However, examples of relatively affordable counties where sales fell more sharply year over year in November include San Joaquin (-11.0 percent), Stanislaus (-13.5 percent) and San Bernardino (-13.6 percent).

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

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