California's Declining Inventory Hurt Home Sales in September, Median Price Climbs to Four Year Highs

California's Declining Inventory Hurt Home Sales in September, Median Price Climbs to Four Year Highs

Residential News » North America Residential News Edition | By Michael Gerrity | October 15, 2012 12:42 PM ET

According to the California Association of Realtors (C.A.R.), continued shortage of available homes for sale lowered California home sales in September, while the median price reached the highest level in more than four years. 

"Sales in the inland and coastal markets continue to move in different directions.  Low inventory - especially in distressed areas - is dampening sales activity," said C.A.R. President LeFrancis Arnold.  "In many of these areas, there is a one- to two-month supply of REO homes on the market.

The Inland Empire and the Central Valley have experienced double-digit sales declines compared with last year.  Meanwhile, sales were higher in San Diego and most Bay Area counties, where the economies appear to be growing faster than the rest of the state." 

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 484,240 units, according to information collected by C.A.R. from more than 90 local Realtor associations and MLSs statewide.  Sales in September were down 5.2 percent from a revised 510,910 in August and down 1.2 percent from a revised 490,280 in September 2011.  The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the September pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

The statewide median price of an existing, single-family detached home inched up 0.3 percent from August's $343,820 median price to $345,000 in September.  The September figure was up 19.5 percent from a revised $288,700 recorded in September 2011, marking the seventh consecutive month of both month-to-month and year-to-year price increases.  September's median price was the highest since August 2008, when the median price was $352,730.  The year-to-year increase was the largest since May 2010.

"For the state, at 3.7 months of supply, unsold inventory is still less than half what it would be in a normal market," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  "As a result of the constrained supply at the moderate and lower end of the market, sales of homes priced under $200,000 dropped nearly 28 percent, and homes priced $200,000-$300,000 fell more than 15 percent in September.  By contrast, in the upper price range, where inventory isn't as much of an issue, sales of homes priced $400,000-$500,000 rose more than 14 percent, and those priced above $500,000 increased more than 15 percent."

Other key facts of C.A.R.'s September 2012 resale housing report include:
  • California's housing inventory eased slightly in September, with the Unsold Inventory Index for existing, single-family detached homes edging up to 3.7 months, up from a revised 3.2 months in August and 5.3 months in September 2011.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered normal.
  • Interest rates dipped in September after rising slightly in August.  Thirty-year fixed-mortgage interest rates averaged 3.47 percent during September 2012, down from 3.60 percent in August, and down from 4.11 percent in September 2011, according to Freddie Mac.  Adjustable-mortgage interest rates also edged down in September, averaging 2.60 percent, down from 2.67 percent in August and down from 2.84 percent in September 2011.
  • Homes sold faster in September, with the median number of days it took to sell a single-family home falling to 39.3 days in September 2012 from 41.1 days in August and down from a revised 54.2 days for the same period a year ago.

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