Lower mortgage rates help home sales heat up in July
Home prices dip lower
Falling mortgage rates helped jump-start previously sputtering home sales in July, but record home prices nudged lower.
A seasonally adjusted 411,630 homes sold in July, a 5.6% increase compared to June and up 1.1% from a year ago, according to the California Association of Realtors. It was the first boost in year-over-year sales and the most homes sold in 15 months.
“Mortgage rates that dipped to the lowest level in nearly three years has helped reduce monthly mortgage payments for the past five consecutive months, giving buyers more purchasing power,” says CAR president Jared Martin. “The boost in demand gave the housing market its first yearly gain since April 2018.”
Home prices drop, but remain above $600,0000
The state’s median-home price — meaning half the homes sold for more, the other half for less — dipped to $610,720 in July, off 0.4% from June, but up a modest 2.8% from a year ago. The median price has topped $600,000 for four consecutive months.
“While it’s encouraging that home sales crept higher in July, the market will continue to be challenged by an overarching affordability issue, especially in high cost areas such as the Bay Area, which requires a minimum annual income well into the six figures to purchase a home,” says Leslie Appleton-Young, senior vice president and chief economist for CAR.
Affordability a big concern
Only 17% of households could afford the median-priced home in San Francisco during the second quarter, according to the latest CAR report. And they would need to earn at least $343,000 to qualify for a mortgage.
The sobering affordability rate is because the Bay Area had a median price of $950,000 in July, down 0.3% from a year ago, but easily the most expensive market in the state. Four Bay Area counties had prices above $1.26 million, led by $1.6 million in San Francisco.
Tulare County had the lowest price among major counties in the state, at $245,000. Siskiyou County had the lowest overall price at $210,000 in the state — or about a third of the state median price.
Home prices, sales compared to a year ago
$1.6 million, down 3%; sales up 10.1%
$839,450, up 1.3%; sales up 6.7%
$685,000, down 5.8%; sales up 8.7%
$650,000, no change; sales up 3.4%
$611,230, up 2.3%; sales up 4.7%
Active listings dropped 2.1% in July compared to a year ago, ending 15 straight months of rising listings.
Those listings took about 3.2 months to sell in July, compared to 3.3 months from a year ago.
Time on the market
The average home on the market sold in 21 days in July vs. 18 days a year ago.