California Home Sales Slowest for a January in 11 Years

Median Sale Price Rose Less Than 2 Percent Year Over Year - Again

By Andrew LePage Housing Affordability, Real Estate

For the second consecutive month, California home sales in January 2019 fell to the lowest level for that month in 11 years as some late-2019 home shoppers struggled with a variety of concerns, including affordability constraints, stock market volatility and the federal government shutdown. This January’s nearly 15 percent year-over-year sales decline was down from the 19 percent drop logged the prior month, but it still ranked as one of the largest annual declines in the last five years. 

California January Home Sales

An estimated[1] 24,674 new and existing houses and condos sold statewide in January 2019 (Figure 1), the lowest sales tally for a January since 2008. January 2019 sales fell 20.4 percent from December 2018 and dropped 14.9 percent from January 2018, CoreLogic public records data show. Sales typically fall sharply between December and January, and since 2000 the average change between those two months is a drop of 25.3 percent. Sales have fallen year over year for the last six consecutive months.

The sales slowdown this January was likely tempered by the decline in mortgage rates that began in December 2018, when many of the buyers who closed transactions this January would have opened their deals. The annual sales decline was more pronounced last December – a 19.4 percent drop that marked the largest annual decline in more than eight years. 

January 2019 sales declined at all price levels. Deals below $500,000 fell 17.6 percent year over year, while sales of $500,000 or more declined 13.5 percent and $1 million-plus deals fell 12.4 percent. Sales of $2 million or more fell 14.2 percent in January 2019 compared with a year earlier. Last year’s stock market volatility likely spooked some would-be high-end buyers and left some with inadequate funds to cover down payment and closings costs.

California Median Sale Price

The median price paid for all new and existing houses and condos sold statewide in January 2019 was $455,000 (Figure 2), down 3.6 percent from December and up 1.6 percent from January 2018. That compares with an annual gain of 7.7 percent in January last year. In December 2018 the state’s median rose 1.3 percent year over year – the lowest annual gain for any month in nearly seven years. The median’s annual growth rate has gradually declined since last spring as home sales have slowed and inventory has risen. To a lesser extent, the relatively small annual gains in the median sale price the past two months reflect a change in market mix, where sales in more expensive markets have accounted for a slightly lower share of all activity.

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 January 2019 median was 20.8 percent below that peak.   

Annual Gain in Median Sale

The 1.6 percent annual gain in the January 2019 median sale price (Figure 3) understates the extent to which affordability has worsened. Compared with January 2018, the monthly principal-and-interest mortgage payment on the state’s median-priced home in January 2019 was up 6.9 percent because of a roughly 0.4-percentage-point gain in mortgage rates over the prior year.

Other January 2019 highlights:

  • In the six-county Southern California region, 12,665 new and existing houses and condos sold in January, down 17.1 percent year over year. January’s median sale price was $505,000, up 2.0 percent year over year.
  • In the nine-county San Francisco Bay Area, 3,857 new and existing houses and condos sold in January 2019, down 14.9 percent year over year. January’s median sale price was $730,000, up 2.2 percent year over year.
  • Some of the state’s more affordable inland counties logged annual gains in total sales or relatively small annual declines in January 2019. Some examples: Butte (+22.0 percent), Yuba (+22.2 percent) Shasta (+2.0 percent), and Fresno (-7.7 percent). However, there were also some relatively affordable counties that experienced annual sales declines more in line with the coastal regions, including the following: Stanislaus (-22.1 percent), Sacramento (-20.3 percent), Riverside (-16.8 percent), Solano (-13.2 percent) and San Bernardino (-13.1 percent).

[1] Because of late data availability, January 2019 sales were not complete in some counties.

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