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June sales plummet amid ‘waning buyer interest’

California’s red-hot housing market is cooling off, at least when it comes to sales, with the largest annual drop in almost four years. Consumers are concerned about fast-rising home prices — which reached a record for the second-consecutive month — and higher mortgage rates.

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By Ron Trujillo/ron@calhomenews.com

California’s booming housing market may have hit a bump, as an increase in active listings failed to boost home sales in June.

Home shoppers – already dealing with higher interest rates, record-high prices and not a lot of homes to choose from – bought fewer homes during the first month of summer, cooling off the red-hot market. June home sales fell 7.3% in June compared to a year ago and was the largest annual drop in almost four years.

“California’s housing market underperformed again, despite an increase in active listings for the third straight month,” says CAR president Steve White, referring to the 8.1% increase in active listings compared to a year ago. “The lackluster spring homebuying season could be a sign of waning buyer interest as endlessly rising home prices and buyer fatigue adversely affected pent-up demand.”

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The decline in home sales had little effect on home prices, which reached a record for the second-consecutive month. The state’s median-home price – meaning half the homes sold for more, the other half for less – increased to $602,760 in June, a 0.3% gain from May and up 8.5% compared to June 2017.

Home prices have jumped at least 8% the past five months compared to a year ago and has been increasing the past six years. The current home price is 1.4% higher than the pre-recession peak.

Leslie Appleton-Young

“Although home prices increased year-over-year in virtually every region of the state in June, at the same time, nearly every county experienced a significant contraction in home sales from a year ago,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “With the year-to-date sales tally now in negative territory, the back-to-back sales declines could be an early sign that the market is transitioning, especially since further rate increases are expected to hamper homebuyers’ affordability and put a cap on how much they are willing to pay for their new home.”

Indeed, the most price-sensitive buyers are definitely pulling back. Home prices below $300,000 plummeted 23.8% compared to a year ago. Sales of $1 million-plus homes increased 7.2%, with sales of those $2 million or more jumped 13%.

Many of those $1 million homes were in the Bay Area, which continues to enjoy strong price gains. Bay Area home prices increased 16.1% compared to a year ago, with five counties reporting median home prices of $1 million or more.

San Mateo County boasts the highest price in the state at $1.65 million, followed by San Francisco at $1.62 million Marin and Santa Clara counties followed at $1.415 million and $1.4 million. Alameda County is the latest to join the million-dollar club at $1.015 million.

Siskiyou County is the most affordable housing market at $187,500. However, the rural county has few homes listed – or sales.

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Home prices compared to a year ago

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$1.62 million, up 10.3%

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$753,750, down 1.8%

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$650,000, up 6.1%

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$586,090, up 6.9%

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$375,000, up 8.1%

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