California Home Sales Slowest for a March in Five Years as Price Growth Moderates

Median Sale Price’s Annual Gain of Less Than 1% was Lowest Since 2012

By Andrew LePage Housing Affordability, Real Estate

Despite lower mortgage rates and higher inventory early this year, California home sales fell 13% from a year earlier this March and were the lowest for that month in five years. The median price paid for a home in March inched up 0.6% from a year earlier, the lowest annual gain in seven years, while Southern California and the San Francisco Bay Area logged tiny annual declines in their regionwide medians – the first declines in seven years.

California March Home Sales Lowest Since 2014

An estimated[1] 34,926 new and existing houses and condos sold statewide in March 2019 (Figure 1), the lowest sales tally for a March since 2014. March 2019 sales rose 32.5% from February 2019 and fell 13.2% from March 2018, CoreLogic public records data show. Sales this March represented a slight improvement in the sense each of the prior three months had the lowest sales for that month in 11 years.

Sales normally jump up between February and March, and since 2000 the average change between those two months is a gain of 34.0%. Sales have fallen year over year for the last eight consecutive months, with those declines ranging from 6.1% in October 2018 to 19.4% in December 2018.

March 2019 sales declined at all price levels. Deals below $500,000 fell 13.7% year over year, while sales of $500,000 or more declined 13.2% and $1 million-plus deals fell 17.8%. Sales of $2 million or more fell 20.6% in March 2019 compared with a year earlier.

Starting in late spring 2018, some potential homebuyers got priced out of the market by the double whammy of rising prices and mortgage rates, while others simply stepped out of the market amid concerns prices were near a peak. The sales trends for April and May this year will likely begin to clarify whether many of those who put plans on hold in 2018 are being lured back into the market by this year’s lower mortgage rates, higher inventory and the resulting improvement in buyers’ negotiating position. March 2019 sales reflect deals recorded in the public record that month, meaning most buyers’ purchase decisions would have been made in February, before mortgage rates had hit their low point for this year.

Seasonally Normal, Month-to-Month Lift for Median Sale Price This March

The median price paid for all new and existing houses and condos sold statewide in March 2019 was $483,000 (Figure 2), up 2.8% from February and up 0.6% from March 2018. An uptick in the median sale price between February and March is normal for the season and on average since 2000 the median has increased 3.8% between those two months. This March’s sub-1% annual gain compares with an annual increase of 7.9% in March last year (Figure 3) and marks the lowest gain for any month since the median rose 0.4% in March 2012.

Annual Gain in Median Sale Price This March Was Lowest in Seven Years

Slowing sales and rising inventory since last spring has moderated home price growth statewide. To a lesser extent the small annual gain in the state’s March median sale price reflects a subtle shift in market mix, where a slightly lower share of all sales occurred in high-cost coastal regions.   

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 March 2019 median was 16.8% below that peak.   

Other March 2019 highlights:

  • In the six-county Southern California region, 17,960 new and existing houses and condos sold in March, down 14.1% year over year. March’s median sale price was $518,500, down 0.1% year over year. It was the first annual decline since March 2012, when the median dipped 0.2%. Of the six counties, only Orange County logged an annual decline – a decrease of 0.7% – this March.
  • In the nine-county San Francisco Bay Area, 6,124 new and existing houses and condos sold in March 2019, down 14.8% year over year. March’s median sale price was $830,000, down 0.1% year over year. It was the first annual decline in the median since it dipped 0.6% in March 2012. Three counties – Marin, Santa Clara and Sonoma – posted annual declines in their median sale prices and one – San Mateo – experienced no annual change.
  • Some of the state’s more affordable inland counties logged annual gains in total sales this March. Two examples were Butte (+35.4%) and Shasta (+8.7%). 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.

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

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