A Glimpse of Hope as Sales Perk Up
With mortgage rates sliding to the lowest level in almost three years, housing markets in California kicked off the second half of the year with a bit of a momentum. The statewide existing home sales increased year-over-year for the first time since April 2018, while sales at the state level climbed back above the 400,000 benchmark and reached the highest level in 15 months. The number of existing single-family home sales was up 5.6 percent from June, up 1.1 percent from July 2018, but remained down year-to-date by 4.9 percent from the same time frame last year.
Home sales remained soft in the bottom and the top end price segments as both declined year-over-year, while the rest of the price points improved from last year. Sales below $300,000 declined by 8 percent from last July primarily due to supply constraint, and sales $2 million and up dropped 1.4 percent likely because of affordability issues.
On the supply side, the state unsold inventory index dipped in July 2019 to 3.2 months from last year's 3.3 months. It was the first drop since April 2018. The dip in the index was attributed to both an increase in sales and a decrease in active listings. While home sales increased for the first time in over a year, the state housing supply also had its first decline since March 2018. Active listings fell 2.1 percent from July 2018, after increasing year-overyear for 15 consecutive months.
The supply condition in the more affordable markets continues to tighten up, as there were fewer homes for sale in the sub $500k market in July. The number of active listings priced below $300k decreased 14.8 percent and those priced between $300k and $500k also dipped 7.8 percent. Contrarily, the number of properties priced at or above $750k increased modestly in the latest month, as high-end markets continued to soften.
The state median price continued to grow on a year-overyear basis, but the record-setting price streak was snapped after registering new highs consecutively for three months. The median price of existing single-family homes in California remained above $600,000 for the fourth consecutive month since April 2019 but dipped slightly to $607,990 from the prior month's $610,720. However, this is still a 2.8 percent increase from the same month of last year. While the yearly growth rate of the state median price is the highest recorded in the last three months, it remained soft compared to late 2018. The year-over-year growth rate for the first seven months in 2019 averaged only 1.9 percent, compared to 8.4 percent in 2018 and 6.6 percent in 2017.
Softer prices coupled with this year's lower interest rates caused the monthly payment on the median-priced home to fall for the fifth month in a row. The pocketbook implications of this trend, which enables homebuyers to save hundreds of dollars per month on the same home, or potentially consider a slightly more expensive home for the same monthly cost, will be important during the second half of 2019. Combined with the long-term benefits of homeownership on personal wealth and quality of life, 2019 is still a great time to buy a home for the long haul.