Home sales in May tumbled to the lowest level since the Great Recession, as the COVID-19 pandemic and the subsequent shutdown greatly affected the housing market for the third straight month.
But even amid the dismal sales report, there are some green shoots as mortgage applications have increased for the ninth-consecutive week thanks to record-low rates and pending home sales — basically those in escrow — were up 67% in May compared to April, according to the California Association of Realtors.
Those figures must continue to make up for a historically miserable May — and spring.
May sales plummeted to an adjusted annualized rate of 238,740 homes, down 13.9% from April and off 41.4% from a year ago, according to the statewide association. It’s the largest annual drop in sales since November 2007, the beginning of the housing collapse during the Great Recession. Sales are now off 12.9% for the year.
May was also the third straight month of double-digit sales declines, the first time since CAR started tracking monthly sales in 1979.
The historic decline in sales was felt statewide, with the Bay Area and Central Coast enduring the most pain at 51.1%, followed by Southern California at 45.6%. The Central Valley, from Bakersfield to the Sacramento region, fared only slightly better, with sales tumbling 36.6% from last year.
“The sharp sales drop in May was the steepest we’ve seen in some time, but there are encouraging signs that show the market is recovering and should continue to improve over the next few months,” says CAR president Jeanne Radisck, a second-generation broker from Bakersfield.
Active listings drop for 11th straight month
The dramatic decline in home sales in May reflect, at least to some extent, fewer home-shoppers in April. The statewide shutdown canceled open houses and greatly limited home showings, stalling home sales. Plus, the pandemic-prompted recession — almost 2.9 million Californians remain out of work — has caused much uncertainty.
And consumers feeling secure enough about the economic situation and looking to buy found very few homes on the market. Active listing fell for the 11th consecutive month in May, with the 34% year-over-year drop the largest since March 2013.
“While we expect sales to remain below pre-COVID-19 levels, closed sales will improve markedly as the phased reopening of the economy continues and consumers feel more confident returning to the market,” says Leslie Appleton-Young, senior vice president and chief economist for CAR.
Higher home price streak ends at 98 months
Home prices, which have enjoyed an impressive almost decade-long run, are definitely feeling the impact of the virus. Demand, even with the shutdown, easily exceeds the supply, but home prices have slipped in recent months.
The median home price dipped to $588,070 in May, down 3% from April and off 3.7% compared to a year ago — the first year-over-year decline since February 2012 and the end to a 98-month higher-price streak.
The nine-county Bay Area remains the priciest region at $965,000, with San Mateo County the most expensive at $1.65 million, dethroning longtime leader San Francisco at $1.63 million. Kings County — Hanford and Lemoore — continued its reign as most affordable at $249,950.