California Home Sales Remain at 11-Year Low in February But Annual Decline Moderates

Lower Mortgage Rates, Higher Inventory Help Tug Some Would-Be Buyers Back Into Market

By Andrew LePage Housing Affordability, Real Estate

For the third consecutive month California home sales in February 2019 were the lowest for that month in 11 years, but the year-over-year sales decline – 10 percent – was the smallest in four months. Some potential homebuyers who had retreated to the sidelines last year were likely lured back into the market early this year by, among other things, lower mortgage rates and higher inventory.

California February Home Sales

An estimated[1] 26,350 new and existing houses and condos sold statewide in February 2019 (Figure 1), the lowest sales tally for a February since 2008. February 2019 sales rose 7.5 percent from January 2019 and dropped 10.3 percent from February 2018, CoreLogic public records data show. Sales typically rise between January and February, and since 2000 the average change between those two months is a gain of 1.7 percent. Sales have fallen year over year for the last seven consecutive months, with those declines ranging from 12.3 percent and 19.4 percent between November 2018 and January 2019.

The annual sales decline this February was likely tempered by a variety of forces, including the significant decrease in mortgage rates in recent months, more inventory and more realistic sellers, as well as the upswing in the stock market early this year. February 2019 sales mainly reflect purchase decisions buyers made between late last December and early this February, and the last federal government shutdown was in effect during most of that period.

February 2019 sales declined at all price levels. Deals below $500,000 fell 12.7 percent year over year, while sales of $500,000 or more declined 8.5 percent and $1 million-plus deals fell 10.5 percent. Sales of $2 million or more fell 18.9 percent in February 2019 compared with a year earlier.

California Median Sale Price

The median price paid for all new and existing houses and condos sold statewide in February 2019 was $470,000 (Figure 2), up 3.3 percent from January and up 2.2 percent from February 2018. That compares with an annual gain of 9.5 percent in February last year (Figure 3).

Annual Gain in Median Sale Price

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 February 2019 median was 18.5 percent below that peak.   

Other February 2019 highlights:

  • In the six-county Southern California region, 13,466 new and existing houses and condos sold in February, down 11.7 percent year over year. February’s median sale price was $512,500, up 1.2 percent year over year.
  • In the nine-county San Francisco Bay Area, 4,354 new and existing houses and condos sold in February 2019, down 12.8 percent year over year. February’s median sale price was $770,000, up 2.7 percent year over year.
  • Some of the state’s more affordable inland counties logged annual gains in total sales. Some examples: Butte (+65.1 percent), Yolo (+11.6 percent), Shasta (+11.5 percent), and Madera (+10.8 percent).Butte County is home to last year’s devastating “Camp Fire” that destroyed thousands of homes in the town of Paradise, boosting housing demand in some other Butte County communities. There were also some relatively affordable inland counties that experienced annual sales declines more in line with the coastal regions, including the following: Stanislaus (-7.3 percent), San Joaquin (-8.3 percent), Riverside (-8.9 percent), Sacramento (-9.6 percent) and Sutter (-10.8 percent).

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

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