December home sales drop to 4-year low in ‘murky’ market

Affordability and increasing mortgage rates continue to hurt the housing market, as home sales in December dropped to the lowest level in almost four years.

[et_pb_section bb_built=”1″ admin_label=”section”][et_pb_row][et_pb_column type=”4_4″][et_pb_code admin_label=”Banner Ad for Post”] style=”display:block” data-ad-client=”ca-pub-6790522041203810″ data-ad-slot=”4272100288″ data-ad-format=”auto”>[/et_pb_code][/et_pb_column][/et_pb_row][et_pb_row admin_label=”row” background_position=”top_left” background_repeat=”repeat” background_size=”initial”][et_pb_column type=”2_3″][et_pb_text _builder_version=”3.19.5″]

Higher interest rates, rising prices ‘erode housing affordability and hamper home sales’

Holiday cheer has given way to housing fears as home sales tumbled in December, sending a chilling reminder that the housing market struggles with uncertainty.

Affordability, higher interest rates and falling home sales are causing more would-be buyers to embrace a wait-and-see approach before purchasing. And the federal shutdown, which is affecting tens of thousands of federal employees in the state and blocking income verification for mortgage applicants, has created another hurdle for an already-stumbling housing market.

[/et_pb_text][et_pb_code _builder_version=”3.0.89″] style=”display:block; text-align:center;” data-ad-layout=”in-article” data-ad-format=”fluid” data-ad-client=”ca-pub-6790522041203810″ data-ad-slot=”1496422532″>[/et_pb_code][et_pb_text _builder_version=”3.19.14″]

December home sales declined 2.4% compared to November, but plummeted 11.6% from December 2017, according to the California Association of Realtors. Home sales dropped to an annualized rate of 372,260 units in December, the fifth consecutive month below the always-important 400,000 mark — and the lowest level of sales since January 2015.     

“The housing market continued to shift in December and drift downward as sales have fallen double-digits for the past three of four months,” says CAR president Jared Martin. “This trend is expected to continue as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.”

Murky, indeed. CAR reports sales declines in 39 of the 51 counties surveyed, with double-digit drops in the Bay Area, Southern California, Central Valley and the Central Coast, which had the largest drop at almost 25%. The Los Angeles and San Francisco regions each fell more than 17%.

Despite the double-digit declines statewide, the median-home price inched up to $557,600, a 0.5% increase compared to November and up a modest 1.5% from December 2017.

Statewide home price reaches a record

The Bay Area remains the most expensive region, with four counties topping the $1 million mark, again. San Francisco is the priciest county at $1.5 million, followed close behind by San Mateo at $1.48 million. Santa Clara County was the fourth most expensive market in the state at $1.15 million, but that was off 11.5% from a year ago.

The statewide median-home price reached a record $570,010 for the year, a 6.0% increase compared to 2017. Affordability remains a major concern for consumers, with only 27% able to buy a home in the third quarter, according to CAR.

“California’s housing market in 2018 was hindered by endlessly rising home prices and interest rate hikes, which combined to erode housing affordability and hamper home sales,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “In the coming months, we expect a brief hiccup in sales as the government shutdown temporarily delays closings due to interruptions in IRS income verification or the processing of HUD, VA and USDA loans.”

[/et_pb_text][/et_pb_column][et_pb_column type=”1_3″][et_pb_text _builder_version=”3.19.4″]

Home prices, sales compared to a year ago

[/et_pb_text][et_pb_blurb use_border_color=”off” border_color=”#ffffff” border_style=”solid” _builder_version=”3.19.4″ font_icon=”%%155%%” border_color_all=”off” title=”San Francisco” image=””]

$1.5 million, up 1.7%; sales up 11.3%

[/et_pb_blurb][et_pb_blurb _builder_version=”3.19.5″ title=”San Diego” image=””]

$618,500, up 2.%; sales down 14.7%

[/et_pb_blurb][et_pb_blurb _builder_version=”3.19.5″ title=”Monterey” image=””]

$590,000, down 3.9%; sales down 31%

[/et_pb_blurb][et_pb_blurb _builder_version=”3.19.4″ title=”Los Angeles” image=””]

$588,140, up 1.8%; sales down 16.3%

[/et_pb_blurb][et_pb_blurb _builder_version=”3.19.4″ title=”Sacramento” image=””]

$364,500, up 4.1%; sales down 22.4%

[/et_pb_blurb][et_pb_blurb _builder_version=”3.19.4″ title=”Fresno” image=””]

$266,500, up 2.6%; sales down 4.7%

[/et_pb_blurb][/et_pb_column][/et_pb_row][et_pb_row][et_pb_column type=”1_3″][et_pb_blurb _builder_version=”3.19.4″ title=”Active listings” use_icon=”on” font_icon=”%%102%%”]

Active listings jumped 30.6% in December compared to a year ago, and have now increased nine straight months.

[/et_pb_blurb][/et_pb_column][et_pb_column type=”1_3″][et_pb_blurb _builder_version=”3.19.4″ title=”Housing inventory” use_icon=”on” font_icon=”%%230%%”]

Those listings would take about 3.5 months to sell, compared to 2.5 months in December 2017.

[/et_pb_blurb][/et_pb_column][et_pb_column type=”1_3″][et_pb_blurb _builder_version=”3.19.4″ title=”Time on the market” use_icon=”on” font_icon=”%%92%%”]

The average home on the market sold in 32 days in December vs. 25 days a year ago.

[/et_pb_blurb][/et_pb_column][/et_pb_row][et_pb_row][et_pb_column type=”4_4″][et_pb_team_member admin_label=”Author” _builder_version=”3.19.9″ name=”About the author” image_url=”” border_radii_image=”|0px|0px|0px|0px” header_level=”h5″ header_font=”Libre Franklin|700|||||||” body_font=”Libre Baskerville||||||||” border_radii=”|0px|0px|0px|0px” border_color_all_image=”#000000″ background_color=”#ffffff” twitter_url=”” linkedin_url=”” saved_tabs=”all” link_option_url_new_window=”on”]

Ron Trujillo, an award-winning business journalist-turned-public relations executive, is the editor-owner of CalHomeNews and can be reached at

[/et_pb_team_member][/et_pb_column][/et_pb_row][et_pb_row][et_pb_column type=”4_4″][et_pb_code admin_label=”Bottom Ad for Post”] style=”display:block” data-ad-client=”ca-pub-6790522041203810″ data-ad-slot=”7225566687″ data-ad-format=”auto”>[/et_pb_code][/et_pb_column][/et_pb_row][/et_pb_section]