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Home sales, prices in February decline from a year ago

Home sales, prices in February decline from a year ago

By Ron Trujillo/ron@calhomenews.com

Home prices and sales increased in February compared to a year ago, but both were down on a month-to-month basis, as the housing market slows slightly amid affordability issues and an ongoing lack of inventory.

Home sales were 400,500 in February, a 4.7% decline compared to January but up 4.9% from a year ago, according to the monthly California Association of Realtors report. February was the 11th-consecutive month above the 400,000 mark.

But before the cheering gets out of hand, February was the weakest month for sales in 2016, with only 381,770 units. So, the almost 5% increase last month compared to a year ago is good but far from great.

Geoff McIntosh

“While it’s encouraging to kick off the year with back-to-back yearly sales increases, moving forward, California’s housing market could lose steam in the long term as the Fed begins to adjust the federal funds rate,” says CAR president Geoff McIntosh. “In the short term, however, the specter of higher interest rates may push buyers off the fence to purchase a home before mortgage rates move even higher.”

Long-term interest rates increased for the second-consecutive week for week ending March 16, according to Freddie Mac. The average rate for a 30-year fixed-rate mortgage was 4.30% with an average 0.5 point for the week, compared to 4.21% a week ago – and 3.73% a year ago.

And higher interest rates – always a concern for buyers, especially first-time homebuyers – could dampen sales and prices.

Leslie Appleton-Young

“Despite a strong sales start for the year, the housing supply shortage in California continues to cast doubt on whether the sales momentum can be carried forward into the spring homebuying season,” says Leslie Appleton-Young, senior vice president and chief economist for CAR.

CAR’s unsold inventory index, which measures the number of months needed to sell the supply of homes on the market at the current sales rate, increased slightly to 4.0 months in February compared to 3.7 months in January. But the current rate is down from 4.7 months in February 2016.

Statewide active listings continued to decline in February, falling 13.9% from a year ago. The annual decline was the largest since May 2013.

“The number of active listings has been on a downward trend for the past 20 months and has shown no signs of improvement,” Appleton-Young says. “As we move into the spring home buying season, we should see a marginal increase in listings, which will be offset by a pickup in sales. The inventory level is not likely to get better in the upcoming months.”

California’s median-home price dipped a modest 2.2% to $478,790 in February compared to January, but was up 7.6% from a year ago.

The price gain was the largest annual increase since January 2016. However, it’s also the second-consecutive month below the half-million-dollar mark.

Double-digit price gains in the Bay Area and the Inland Empire (Riverside and San Bernardino counties) accounted for part of the annual price increase.

The Bay Area has four counties with a median-home price of more than $1 million, led by San Mateo at $1.35 million. San Francisco finished in second-place at $1.28 million, followed by Marin at $1.17 million.

Glenn County in Northern California has the lowest price at $181,500, and the only county below the $200,000 level in the state.

CAR offers county-by-county home sales and prices on its website.

Featured photo of a San Jose subdivision by PBK-PG/Shutterstock.com.

By the numbers

Nowhere close

How does the current median-home price compare to the highest-ever and the lowest price during the housing recovery?

February 2017: $478,790
February 2009 (lowest price): $245,230
May 2007: $594,530

A seller’s market, indeed

February’s sales-to-list price was 98.6%, meaning buyers basically paid almost full price for homes purchased. Bidding wars continue in many red-hot markets in the state.

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