Home prices increased at the largest pace in almost a year and a half and sales remained strong in November, thanks to near-record-low mortgage rates and few homes on the market.
The California Association of Realtors reported an annualized rate of 402,880 homes sold in November, down 0.3% from October — but up 5.6% from a year ago. The annualized sales figure represents what would be the total number of homes sold if sales maintained the November pace throughout the year.
Sales up in LA, down in Bay Area
“While statewide home sales and prices eased back slightly (in November compared to October) as the housing market continued to move into the offseason, a favorable lending environment continues to draw interest from buyers who want to take advantage of low rates,” says CAR president Jeanne Radsick, a real estate agent in Bakersfield. “The upper-end of the market, in particular, is showing some welcome improvement in recent months as both sales and prices posted mild growth from a year ago in November.”
Home sales were solid across the state in November, with a 4.6% boost in Southern California followed by a modest 1% gain on the Central Coast. Only the Bay Area experienced a decline, falling 4.8% compared to a year ago, with seven of the nine counties reporting slower sales.
Active listings, housing inventory plummet
The better-than-expected sales are a bit of a surprise with significantly fewer homes on the market. Active listings — basically the number of homes on the market — dropped for the fifth consecutive month, falling 22.5% from a year ago. It was the third straight double-digit drop and the largest since April 2013.
The dramatic decline in active listings greatly impacted the housing inventory, which plummeted to 3.1 months compared to 3.7 months a year ago. November’s housing inventory was the lowest level in 17 months.
The housing inventory is basically how long it would take to sell all of the homes on the market at the current sales rate. A six-month housing inventory is considered normal and the sign of a healthy, stable market. However, some housing experts have revised the figure to four months or so.
‘A more robust market’
Fewer homes on the market helped homeowners looking to sell — and hurt home-shoppers. The state’s median home price was $589,770 in November, a 2.5% drop compared to October but up 6.4% from a year ago, the largest annual increase since July 2018. However, it was also the first time in seven months the median home price dipped below $600,000.
“We’re seeing a more robust market in the second half of the year, driven primarily by the lowest interest rates in nearly three years,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “While uncertainties and supply constraints will continue to dictate the market outlook in 2020, the California housing market will likely wrap up 2019 in slightly better shape than previously thought.”
“We’re seeing a more robust market in the second half of the year, driven primarily by the lowest interest rates in nearly three years.”
— Leslie Appleton-Young, chief economist for CAR
But affordability, even with the low mortgage rates, remains a concern for many consumers looking to purchase. Only three of 10 families could afford to buy during the third quarter, according to CAR.
The Bay Area, as always, was the most expensive housing market, with four counties topping $1 million (San Francisco prices soared 12.2% to $1.62 million). Tulare County — think Visalia, Tulare and Porterville — was the most affordable market in the state, at $240,000.
Lassen County was slightly more affordable at $222,500, but the county has few home sales, which greatly skews the data.
November home prices, sales compared to a year ago
Source: California Association of Realtors