California Housing Market Bounces Back in February
According to the California Association of Realtors, led by the San Francisco Bay region, California home sales registered healthy gains in February 2018 on both a monthly and annual basis after January's weak start.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 422,910 units in February, according to information collected by C.A.R.
The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
February's sales figure was up 3.3 percent from the revised 409,520 level in January and up 5.4 percent compared with home sales in February 2017 of a revised 401,060. The year-to-year increase was the largest since March 2017, and the month-to-month increase was the largest since June 2017.
"February's solid market performance was likely fueled by rising interest rates, which motivated buyers to rush in and close escrow before rates move even higher as they're anticipated to do in the coming months," said C.A.R. President Steve White. "Despite losing ground in January, February's strong sales gain more than covered the loss, resulting in a 1.1 percent increase so far this year."
While the statewide median price slipped from January, it continued to grow at a strong year-over-year pace and has remained above the $500,000 mark for a full year. The $522,440 February median price was down 1.0 percent from January's $527,780 and was 8.8 percent higher than the revised $480,270 recorded in February 2017. The year-over-year price gain has been growing at or above 7 percent for eight of the past nine months.
"Home prices across the state continued to grow in general, especially in the Bay Area Region, where seven of nine counties posted double-digit annual increases and five of nine counties surpassed their previous peak prices," said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young. "What's more, with single-family home prices rising rapidly out of reach, buyers increasingly turned to condominiums, which pushed the median price of condominiums to a new record high."Other key points from C.A.R.'s February 2018 resale housing report include:
- On a regionwide basis, the San Francisco Bay Area posted the largest sales gain with a 7.1 percent increase from last February. The Los Angeles metro region experienced a 2.5 percent annual sales drop, and sales in the Inland Empire housing market declined 1.2 percent. Home prices rose on a monthly and annual basis in all three regions.
- Sales increased in eight of nine Bay Area counties, with Contra Costa (11.2 percent), Napa (18.2 percent), and San Mateo (16.1 percent) all increasing by double digits. San Francisco, which had the highest median price in February, was the only county with a year-over-year drop in sales.
- Central Valley also experienced an increase in sales, as the region maintained its momentum for the second consecutive month. Sales of existing single-family homes were up 6.3 percent when compared to last February with half of all counties improving from last year, while the rest dipped on a year-over-year basis.
- The Southern California market was not as robust as the Bay Area and the Central Valley with an overall sales decline of 2.8 percent when compared to last February. Additionally, all six Southern California counties recorded sales decreases on a year-over-year basis. Ventura County declined the most in the region at 7.1 percent, while Riverside had the smallest at 0.8 percent.
- The bottom end of the market continues to bear the brunt of the housing shortage as homes priced under $200,000 declined 23 percent on an annual basis, while homes priced $2 million and higher increased by 31.1 percent. In general, supply constraints continued to limit sales in market segments priced below $400,000, but properties valued above that price level showed modest-to-strong growth in sales in the most recent month.
- Home prices at the state level continued to grow at a strong pace in February with the median price rising 8.8 percent from last year. The increase was the highest in the last three months and was slightly higher than the 6-month average of 7.4 percent recorded between August 2017 to January 2018. The price increase was particularly strong in the Bay Area with the regional median price increasing 13.9 percent over last year. All nine counties in the region increased on a year-over-year basis, and five of the counties hit new median price peaks.
- While the price growth in Southern California was not as strong as that of the Bay Area, the increase was still solid. All counties increased on a year-over-year basis by at least 4.5 percent with Los Angeles increasing the most at 12.1 percent. Orange County followed with an 8.1 percent year-over-year increase, surpassing the $800,000 benchmark for the first time and setting a new record high median price ($805,380).
- Condo/townhome prices have been growing at a robust pace as well. The statewide condo/townhome median price has been growing faster than that of the existing single-family homes with a 13.3 percent year-over-year increase, as compared to 8.8 percent for existing single-family homes. At $461,400, the statewide condo/townhome median price set a new peak price, exceeding the previous high of $451,450 registered in June 2017.
- Statewide active listings improved in February, dipping just 1.3 percent from a year ago. While the number of available listings for sale has trended downward for more than two years, February marked the second time in a year that the listings decline was in the single digits.
- After hitting a 14-year low in December, the available supply of homes improved for the second straight month, with the statewide unsold inventory index edging up to 3.9 months in February from 3.6 months in January. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate. The index stood at 4.0 months in February 2017.
- The median number of days it took to sell a single-family home remained low at 26.1 days in February, compared with 33.3 days in February 2017.
- C.A.R.'s sales price-to-list price ratio was 99.2 percent statewide in February, 98.7 percent in January, and 98.6 percent in February 2017.
- The average statewide price per square foot for an existing, single-family home statewide was $265 in February, up from $244 in February 2017. The average price per square foot in San Francisco County broke the $1,000 price point for the first time in February, trailed closely by San Mateo County at $958 per square foot.
- Mortgage rates have been on the rise since breaking the 4.0 percent barrier in January. The 30-year, fixed-mortgage interest rates averaged 4.33 percent in February, up from 4.03 percent in January and from 4.17 percent in February 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also edged higher in February to an average of 3.60 percent from 3.47 percent in January and from 3.24 percent in February 2017.