A dramatic decline of homes on the market and record-high prices easily offset historically low mortgage rates, as home sales barely budged in October.
Active listings dropped for the fourth-consecutive month, falling 18% compared to a year ago — the largest slide since May 2013, according to the California Association of Realtors. It’s a dramatic turnaround from just a few months ago, when active listings increased for 15 straight months, showing signs of becoming a more balanced housing market.
But the market remains to the advantage of sellers. The average home entered escrow in 24 days in October, down slightly from 26 days a year ago. And the unsold inventory index — basically how long it would take to sell all the homes listed — dropped to three months, the lowest level since June 2018.
Faster-selling and fewer homes on the market did little to affect home sales in October. CAR reported a seasonally adjusted sales rate of 404,240 in October, a 0.1% increase compared to September and up 1.9% from a year ago. The figure is based on how many homes would sell at the current pace for a year.
“The California housing market continued to see a gradual improvement in recent months as the current mortgage environment remains favorable to those who want to buy a home,” says CAR president Jeanne Radsick, a second-generation Realtor in Bakersfield. “With interest rates remaining historically low for the foreseeable future, motivated buyers finding that homes are slightly more affordable may seize the opportunity and resume their home search.”
Fast-rising home prices ‘consequence of the ongoing mismatch between supply and demand’
October’s median home price was $605,680, basically the same as September — and up 6% from a year ago. The annual price gain was the largest since July 2018, and the seventh consecutive month above $600,000.
“The latest surge in home prices is the consequence of the ongoing mismatch between supply and demand,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “While low-interest rates will reduce borrowing costs for buyers and temporarily alleviate affordability concerns at the micro-level, without an increase in housing supply — including new housing construction for sale or rent — fundamental issues remain at the macro level, which will worsen the affordability crisis down the road.”
Current home prices, sales compared to a year ago
Despite the record-low mortgage rates, only one of every four consumers (24%) in California believes it’s a good time to buy a home, compared to 27% in 2018, according to a monthly Google poll conducted by CAR.
160 miles — and $1.35 million — of separation
As always, it was certainly a difficult time to buy a home in the Bay Area, where home prices dipped 2% compared to a year ago. But Bay Area home prices were easily the highest in the state at $940,000.
San Francisco was the highest-priced county (it’s a city and county) at $1.65 million, followed by second-place San Mateo at $1.56 million. Marin and Santa Clara counties also topped the $1 million mark.
“While low-interest rates will reduce borrowing costs for buyers and temporarily alleviate affordability concerns at the micro-level, without an increase in housing supply — including new housing construction for sale or rent — fundamental issues remain at the macro level, which will worsen the affordability crisis down the road.”
Leslie Appleton-Young, chief economist for California Association of Realtors
Madera County, about 15 miles north of Fresno, boasted the largest one-year price gain at 17.7% to $299,950. Madera, about 160 miles from San Francisco, is $1.3 million cheaper than the city by the bay.
San Bernardino, a popular low-price option for those in the Los Angeles region, had the second-largest price increase at 10.4% during the past year.
Glenn County was the most affordable housing market at $245,000.