California Housing Market Shows Signs of Modest Strengthening in April

Annual Drop in Home Sales Lowest Since Last Summer

By Andrew LePage Housing Affordability, Real Estate

California’s housing market gained a little steam in April as some buyers were motivated by lower mortgage rates, more inventory and an improved negotiating position with sellers. April home sales rose more than usual from March and the year-over-year decline in transactions was the smallest since last summer. Several San Francisco Bay Area counties posted annual declines in their median sale prices in April but the statewide median’s modest annual increase was the highest since last November.

California April Home Sales Lowest Since 2014

An estimated[1] 38,730 new and existing houses and condos sold statewide in April 2019 (Figure 1), up 10.7% from March 2019 and down 4.6% from April 2018, CoreLogic public records data show. Sales this April were the lowest for that month in five years but represented a slight improvement in the sense that the 4.6% annual decline was the smallest since sales began falling year over year last August.

Sales normally edge higher between March and April – since 2000 the average change between those two months is a gain of 1.8%.

April 2019 sales declined at all price levels but the decreases were largest in the lower ranges. Deals below $300,000 fell 12.2% year over year, while sales under $500,000 fell 7.4% and sales of $500,000 or more declined 2.8%. Sales of $1 million-plus fell 4.5% year over year and $2 million-plus deals fell 2.7%.

Last year some potential homebuyers got priced out of the market by the double whammy of rising prices and mortgage rates, which meant the mortgage payments they faced had risen significantly more than prices alone and had far outpaced income growth. There was also a psychological shift in 2018 where many home shoppers, facing a thin inventory, became discouraged and simply stepped out of the market, some fearing prices had neared a peak. This year there’s more inventory to choose from in most areas, mortgage rates have trended significantly lower and home prices appear flat, if not up or down a tad, year over year. In many markets the “months of supply” – the time it would take to sell all homes on the market at the current sales pace – has shifted in buyers’ favor and given them at least a bit more power at the bargaining table. If those factors persist, coupled with economic growth, sales could continue to strengthen during the spring-summer homebuying season.

April Median Sale Price Up More Than Usual

The median price paid for all new and existing houses and condos sold statewide in April 2019 was $497,000 (Figure 2), up 3.5% from March and up 2.5% from April 2018. An uptick in the median sale price between March and April is normal for the season and on average since 2000 the median has increased 1.3% between those two months. This April’s 2.5% annual gain was down from an annual increase of 7.8% in April last year (Figure 3), but this April’s annual gain was the highest for any month since the median rose 3.6% in November 2018. This March’s revised $480,000 median sale price was unchanged from a year earlier, while the gains this January and February were just below 2%.

April's Annual Gain in Median Sale Price

In part, the higher annual gain in the state’s median sale price this April reflects a shift in market mix, where sales in mid- to high-cost areas represented a somewhat higher share of all activity. Sales of $500,000 or more accounted for 50% of all deals this April, up from 47.9% this March and up from 48.5% in April 2018.

Last month’s $497,000 median neared the Golden State’s all-time high median of $500,000 – in nominal terms – reached in June 2018. Adjusted for inflation, however, the median has not returned to its pre-housing-bust peak in March 2007, and the April 2019 median was 14.9% below that peak.   

Other April 2019 highlights:

  • In the six-county Southern California region, 20,074 new and existing houses and condos sold in April, down 3.3% year over year. April’s median sale price was $527,500, up 1.4% year over year. Of the six counties, none logged a year-over-year decline in the median sale price but San Diego and Ventura counties showed no change from a year earlier.
  • In the nine-county San Francisco Bay Area, 6,987 new and existing houses and condos sold in April 2019, down 7.6% year over year. April’s median sale price was $850,000, unchanged from a year earlier. Five of the region’s nine counties – Alameda, Contra Costa, Marin, Santa Clara and Sonoma – posted annual declines in their median sale prices that ranged from 0.8% to 6.5%.
  • Counties that bucked the statewide trend and logged annual gains in total April home sales included the following: Yuba (+13.6%), Butte (+8.1%), San Francisco (+5.1%), Ventura (+3.2%) and San Joaquin (+2.3%).

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

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