California Home Prices End 2017 on High Note
According to the California Association of Realtors, amid the lowest housing inventory levels in more than 13 years, California existing home sales still eked out a year-over-year gain, while the median sales price posted a solid annual increase.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 420,960 units in December 2017, according to information collected by C.A.R. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The December 2017 sales figure was down 4.4 percent from the 440,340 level in November 2017 and up 1.4 percent compared with home sales in December 2016 of a revised 415,280.
For 2017 as a whole, a preliminary 423,760 homes closed escrow in California, up 1.4 percent from 2016's pace of 417,720. After a strong first quarter start to 2017, sales momentum lost steam throughout the remainder of the year, and year-to-date sales growth declined steadily to hit the lowest level at the end of the year.
"A severe shortage of homes for sale continues to push up home prices and erode affordability, which in turn is subduing home sales," said C.A.R. President Steve White. "What's more, with the passage of the tax reform bill that makes homebuying less attractive, homeownership costs will increase for many, which could reduce the desire and demand for buying a home."
The statewide median price continued to grow at a strong pace over last year and remained above the $500,000 mark for the tenth straight month. The $549,560 December median price was 0.5 percent higher than November's $546,820 and 7.6 percent higher than the revised $510,560 recorded in December 2016. The year-over-year price gain has been growing at or above 7 percent for six of the past seven months.
"California's housing market turned in a respectable performance throughout 2017, with home sales increasing 1.4 percent and the median price climbing 6.9 percent for the year as a whole to reach $537,860 in 2017," said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young. "Looking ahead, the market will remain solid but both sales and prices will be impacted by inventory shortages, impending interest rate hikes, and general economic factors including the effects of tax reform."Other key points from C.A.R.'s December 2017 resale housing report include:
- All of the major regions posted year-over-year sales declines, with sales in the Los Angeles metro region dropping 7.1 percent, the Inland Empire decreasing 3.5 percent, and sales in the San Francisco Bay Area dipping 0.3 percent from last year.
- Sales dropped in five of six counties in the Southern California region, with both Ventura and Orange County decreasing by double digits. A supply shortage and affordability were likely factors in the decline. Sales in Los Angeles, San Diego, and Riverside also dropped moderately when compared to last year, while sales in San Bernardino remained virtually unchanged.
- Home prices across the state continued to grow in general in December. Forty-five of the 51 reported counties recorded a year-over-year price increase, with 19 of them growing at double-digit rates.
- With housing inventory at the tightest level among all regions across the state, the Bay Area region continued to appreciate the most with a 14.1 percent growth rate from the previous year. Seven of the nine Bay Area counties recorded a year-over-year increase in median price of at least 10 percent. Santa Clara prices surged the most at 34.7 percent.
- Statewide active listings continued to decline in December, dropping 12 percent from a year ago. Since the beginning of the year, active listings have declined by more than 10 percent every month, and the number of available listings for sale has trended downward for more than two years.
- The available supply of homes hit the lowest level observed since June 2004, with the statewide unsold inventory index dropping to 2.5 months in December from 2.9 months in November. 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 2.6 months in December 2016.
- The median number of days it took to sell a single-family home remained low at 25 days in December, compared with 32 days in December 2016.
- C.A.R.'s sales price-to-list price ratio was 98.7 percent statewide in December, 98.9 percent in November, and 98.1 percent in December 2016.
- The average statewide price per square foot for an existing, single-family home statewide was $265 in December, up from $246 in December 2016.
- Mortgage rates edged higher in December as 30-year, fixed-mortgage interest rates averaged 3.95 percent in December, up from 3.92 percent in November and from 4.2 percent in December 2016, according to Freddie Mac. The five-year, adjustable mortgage interest rate also ticked higher in December to an average of 3.39 percent from 3.24 percent in November and from 3.23 percent in December 2016.