California Home Sales Lose Steam in June Despite Lower Mortgage Rates

Median Sale Price Edged Up to New Record but Annual Gain Was Less Than 2%

By Andrew LePage Housing Affordability, Real Estate

After strengthening modestly this spring amid falling mortgage rates, California home sales downshifted in June, when activity fell 10% below a weak June 2018 – the first month last year to signal a significant slowdown. The median price paid for a Golden State home in June was a record $508,500 but the gain from a year earlier was less than 2% and one major region, the San Francisco Bay Area, logged an annual decline of around 2%.

California June Home Sales Lowest for That Month in Five Years

An estimated[1] 40,474 new and existing houses and condos sold statewide in June 2019 (Figure 1), down 7.7% from May 2019 and down 10.1% from June 2018, CoreLogic public records data show. Sales this June were the lowest for that month in five years, since 39,818 homes sold in June 2014. Activity normally edges higher between May and June, and since 2000 the average change in sales between those two months is a gain of 4.4%. Sales have fallen year over year for the last 11 consecutive months. However, the annual decline in sales transitioned from double-digit losses between last November and March this year to smaller declines of around 4% this April and May.  

June’s larger sales decline came despite a healthy economic backdrop and modestly improved affordability. The unemployment rate in California averaged 4.2% during the first six months of 2019, the state’s lowest average for the first half of the year since the late 1960s. Better affordability this year reflects lower mortgage rates and a flattening or, in some areas, small annual decline in home prices. Although the state’s median sale price rose 1.7% year over year this June, the principal-and-interest payment on the median-priced home fell about 8% because the rate for a fixed-rate 30-year mortgage dropped about 80 basis points year over year. Still, after years of rising prices many would-be buyers remain priced out and others are concerned about buying near a possible price peak.

Many of the buyers whose deals were recorded this June would have signed sales contracts in May or April. The continued downward movement of mortgage rates this summer might eventually lead to a modest pick-up in sales, especially if inventory continues to rise. One caveat to this June’s annual sales decline is there was one less business day for recording deals compared with June 2018. If it weren’t for this, the annual drop likely would have been closer to 6%.

California Median Sale Price Edged Up to an All-Time High of $508,500 This June

June 2019 sales declined at all price levels, with the largest drops in the lower price ranges. Deals below $300,000 fell 18% year over year, while sales under $500,000 fell 12.3% and sales of $500,000 or more declined 7.5%. Sales of $1 million-plus fell 12.1% year over year and $2 million-plus deals fell 8.7%.

California Median Sale Price Annual Growth Rate Below 2 Percent Most of 2019    Year-Over-Year Change in California's Median Sale Price

The median price paid for all new and existing houses and condos sold statewide in June 2019 was a record $508,500 (Figure 2), up 1.7% from the prior all-time high of $500,000 in both May 2019 (revised) and June 2018. Although some parts of the state continue to log modest annual home price appreciation, at least part of the reason the statewide median hit a record this June was a shift toward a lower share of activity occurring in more affordable markets, where inventory remains relatively tight. An uptick in the median sale price between May and June is normal for the season and on average since 2000 the median has increased 1.5% between those two months. This June’s 1.7% year-over-year gain was down from an annual increase of 6.4% in June last year and a nearly 9% gain in June 2017 (Figure 3).

Other June 2019 highlights:

  • Adjusted for inflation, California’s June 2019 median sale price remained 13.0% below its May 2007 peak.
  • In the six-county Southern California region, 20,790 new and existing houses and condos sold in June 2019, down 8.8% year over year. June’s median sale price was a record $541,250, up 1.2% year over year. Four of the counties posted annual gains in their medians between 0.5% and 5.3%, while Orange and Ventura counties logged annual declines of 0.3% and 5.7%, respectively.
  • In the nine-county San Francisco Bay Area, 7,357 new and existing houses and condos sold in June 2019, down 12.6% year over year. June’s median sale price was $855,000, down 2.3% from a year earlier. At least part of the annual decline in the regional median reflects a subtle shift toward a lower share of sales occurring in four of the priciest counties – Marin, San Francisco, San Mateo, Santa Clara. Two of the region’s nine counties – Santa Clara and Sonoma – posted annual declines in their medians of 1.6% and 3.2%, respectively, while Alameda and Solano counties experienced no change from June 2018 and the other five counties logged annual gains in their medians of between 1.1% and 4.5%.

For the latest data briefs for Southern California and San Francisco Bay Area, please click here.

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

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