Ron Trujillo | Aug 21, 2019 | 0
Lower rates raise home sales in August
‘Buyers remain cautious … because of the economic and market uncertainty’
Lower mortgage rates helped lift home sales for the second-consecutive month in August, and home prices reached a new record.
A seasonally adjusted 406,100 homes were sold in August, down 1.3% from July but up 1.6% from a year ago, according to the California Association of Realtors. The annualized sales figure represents what would be the total number of homes sold during the year if sales maintained the August pace.
The annual sales gain was the highest in the past 10 months, according to the state association.
“Housing demand has exhibited signs of improvement in recent months as lower rates continued to reduce the cost of borrowing for home buyers,” says CAR president Jared Martin. “However, buyers remain cautious, and many are reluctant to jump in because of the economic and market uncertainty that continues to linger, and that is keeping growth subdued despite significantly lower rates.”
‘Lower rates have no doubt boosted buyers’ purchasing power’
Buyers are also cautious because of record-high prices. The median-home price was $617,410 in August, a 1.5% increase from July and up 3.6% from a year ago. It’s the fifth-consecutive month where the median-home price — meaning half the homes sold for more, the other half for less — has been above $600,000.
Mortgage rates, currently at their lowest level in about three years, have allowed home buyers to enjoy more home for lower monthly mortgage payments.
“Low interest rates, which helped to reduce monthly mortgage payments, have provided much-needed support to improve housing affordability and elevate home sales over the past few months,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “While lower rates have no doubt boosted buyers’ purchasing power, they have also been a contributing factor to higher home prices this year.”
Affordability, record-high prices a worry
Low mortgage rates help, but home-shoppers are still concerned about the record-high prices — and buying at the peak of the market.
The Bay Area, where only one of every six households can afford to buy, continues as the most expensive market, with four counties about the million-dollar mark, led by San Francisco at $1.6 million.
Tulare County — Visalia, Tulare and Porterville — is the cheapest housing market among the major counties in the state at $250,000.
Visalia, Modesto among nation’s highest salaries — when adjusted for housing costs
Homes are taking a bit longer to sell, about 23 days in August compared to 21 days a year ago.
Home prices, sales compared to a year ago
$1.6 million , up 3.4%; sales down 9.3%
$720,000, up 25.8%, sales down 8.7%
$650,000, down 1.5%; sales up 2.3%
$627,690, up 3.3%; sales down 1.5%
$294,900, up 3.1%; sales down 2.7%