Categories
News

January home sales climb despite listings dropping to 7-year low

Home listings plunged almost 27%, the largest decline in almost seven years. Few homes on the market helped boost prices vs. a year ago.

A flip of the calendar to a new year did little to affect the housing market in January, with near-record-low mortgage rates continuing to attract buyers who found very few homes on the market.

Sales dipped to a seasonally adjusted annualized rate of 395,550 homes in January, down 0.7% from December but up 10.3% from a year ago, according to the California Association of Realtors. It’s the second consecutive month under 400,000, considered the threshold of a so-called “seller’s market.”

But the state’s housing market has been anything but normal the past two years. Active listings plummeted 26.9% in January compared to a year ago, the largest year-over-year drop since April 2013. And the unsold inventory index — basically how long it would take to sell the homes on the market at the current pace — fell to 3.4 months in January, compared to 4.6 months a year ago.

“The strong sales momentum that we saw in the second half of last year carried over into the new year, thanks to favorable home-buying conditions,” says CAR president Jeanne Radisck, a second-generation Realtor from Bakersfield. “And while home sales were up double-digits from a year ago, it’s important to remember that current sales are being compared to a market that one year ago was at its lowest level in 10 years as economic uncertainties clouded the market outlook while the government shutdown delayed escrow closings.”

“And while home sales were up double-digits from a year ago, it’s important to remember that current sales are being compared to a market that one year ago was at its lowest level in 10 years as economic uncertainties clouded the market outlook while the government shutdown delayed escrow closings.”
— Jeanne Radsick, president of California Association of Realtors

Four consecutive months of 6%-plus price gains

With few homes on the market, the median home price increased 7.1% to $575,160 in January, the fourth consecutive month of year-over-year gains of at least 6%. However, the price was off 6.1% compared to December, the largest month-to-month decline in seven years.

Home-shoppers will benefit from the combination of near-record-low mortgage rates — the lowest in about five decades — and steady home prices. However, affordability remains a major concern, since fewer than one of every three households can buy a home, and a much lower rate in the Bay Area, where home prices topped $1 million.

“With interest rates on a declining trend again due to concerns about the impact of the coronavirus, motivated buyers will have an opportunity to stretch their purchasing power in the housing market,” says Leslie Appleton-Young, CAR senior vice president and chief economist. “The economic outlook, however, is less clear than a month ago before the outbreak of the disease, and we should expect market uncertainties to continue to linger on for the short term.”

Leslie Appleton-Young, chief economist for California Association of Realtors

“With interest rates on a declining trend again due to concerns about the impact of the coronavirus, motivated buyers will have an opportunity to stretch their purchasing power in the housing market,” says Leslie Appleton-Young, CAR senior vice president and chief economist. “The economic outlook, however, is less clear than a month ago before the outbreak of the disease, and we should expect market uncertainties to continue to linger on for the short term.”

San Francisco is the most expensive county at $1.46 million, followed close behind by San Mateo at $1.42 million. Home prices in Marin and Santa Clara counties also remained above $1 million in January.

Tulare County — better known Visalia, Tulare and Porterville — boasts the lowest-priced metropolitan region in the state, at $240,000.

January home prices compared to a year ago

Ron Trujillo

Longtime business journalist-turned-public relations executive who enjoys reporting on residential real estate in his spare time. He can be reached at ron@calhomenews.com.