California Home Sales Dip to a Four-Year Low

An August Drop in Mortgage Rates Helps Temper Decline in Activity

By Andrew LePage Housing Affordability, Real Estate

California home sales edged moderately lower in August, marking the twelfth month out of the last 13 in which sales were lower than a year earlier as some would-be buyers remained priced out and others stayed on the sideline, hesitant to buy near a potential price peak. The statewide median sale price remained 1% higher than August 2018 but in Southern California the median was flat year over year and in the San Francisco Bay Area it fell slightly for the fourth consecutive month.

An estimated[1] 42,440 new and existing houses and condos sold statewide in August 2019 (Figure 1), down 0.2% from July 2019 and down 2.8% from August 2018, CoreLogic public records data show. Activity normally edges higher between July and August, and since 2000 the average change in sales between those two months is a gain of 2.8%. Statewide sales have fallen on a year-over-year basis since August 2018, with the only annual gain – 2.1% – in July this year.

California August Home Sales Lowest for That Month in Four Years

Last month’s 2.8% annual sales decline was likely tempered by this summer’s downward trend in mortgage rates. During the first half of this year sales fell nearly 9% from the same period last year, and the annual declines during the first three months of this year were double-digit. The significant drop in mortgage rates in recent months has helped stoke sales by enabling many buyers to purchase homes with at least modestly lower payments than they would have faced last year. While California’s median sale price was up 1% year over year this August, the state’s “typical mortgage payment” – the monthly principal and interest payment on the median priced home – fell almost 11% because of a roughly 1 percentage point decline in mortgage rates over that 12-month period.

Compared with a year earlier, August 2019 sales declined across the price spectrum. Deals below $300,000 fell 13.1% year over year, while sales under $500,000 fell 7.9% and sales of $500,000 or more fell 4.9%. Sales of $1 million-plus fell 6% year over year and $2 million-plus deals fell 2.6%. Through the first seven months of this year sales of $1 million or more have fallen 8.1% compared with the same period last year, while $2 million-plus sales are down 7.3%. Stock market volatility has likely played a role in this year’s decline in high-end sales.

California's Median Sale Price Has Edged Lower Since Hitting All-Time High This June

The median price paid for all new and existing houses and condos sold statewide in August 2019 was $499,000 (Figure 2), down 0.2% from $500,000 in July 2019 and up 1% from $494,000 in August 2018. On average since 2000 the median hasn’t changed at all between July and August. This August’s 1% year-over-year gain in the median was down from an annual increase of 6.2% in August last year and an 8.1% gain in August 2017 (Figure 3).

Annual Growth Rate for California's Median Sale Price Steady at 1 Percent

Other August 2019 highlights:

  • Adjusted for inflation, California’s August 2019 median sale price remained 14.6% below its March 2007 peak.
  • In the six-county Southern California region, 22,025 new and existing houses and condos sold in August 2019, down 1.2% year over year. August’s median sale price was $535,000, unchanged year over year. Four of the counties posted annual gains in their medians of between 0.7% and 5.3%, while Orange and San Diego counties logged annual declines of 1.0% and 0.1%, respectively.
  • Counties in the relatively affordable Central Valley and Inland Empire (Riverside-San Bernardino counties) recorded some of the state’s largest annual increases in home sales this August, including the following: Butte (+13.9%); Sutter (+12.7%); Solano (+8.6%); Riverside (6.7%); and Kern (+6.2%).

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

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

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