Home sales bounced back at a record pace in June, and prices reached a record high with the stronger-than-expected demand for homes, especially for higher-priced properties.
Sales climbed to an annualized pace of 339,910 units, an almost hard-to-believe 42% increase compared to May — the largest month-to-month boost in almost 40 years of tracking sales, according to the California Association of Realtors. But home sales in June were still off 12.8% compared to a year ago.
It’s a big step forward after sales plummeted at a record pace in May, as the pandemic-prompted shutdown led to the lowest level since the Great Recession. June’s above 300,000 home sales end two months below the closely watched threshold that determines whether the market is solid — or at least stable — or struggling.
Cheers — and a few concerns
There’s certainly much to cheer, especially after dismal figures in April and May, but all regions reported lower home sales in June compared to a year ago, with Southern California tumbling 12.2%. Orange County had the largest annual decline at 20.4% compared to a year ago, but Los Angeles and Ventura counties were not far behind at 19% and 18.4%, respectively.
“Home sales bounced back solidly in June after hitting a record bottom in May, as lockdown restrictions loosened and pent-up demand driven by record-low interest rates roared back,” says CAR president Jeanne Radsick, a broker in Bakersfield. “While the momentum is expected to be sustained as we kick-off the third quarter, the resurgence in coronavirus cases remains a concern and may hinder the market recovery in the second half of the year.”
As of June 17, Governor Gavin Newsom has ordered another round of restrictions for 30 counties in California, affecting about 80% of the state’s population. While home sales can continue, the new restrictions amid more uncertainty and the surge in coronavirus cases statewide could slow some home-shoppers.
June home sales, prices compared to a year ago by county
But even a slight dip in sales will likely do little when it comes to prices, simply because the demand for homes is outpacing the limited supply. Active listings plummeted 43% in June compared to a year ago, the seventh straight month with listings tumbling at least 25%. Basically, there are few homes on the market and those listed are getting a lot of attention, with bidding wars and multiple offers for more properties.
The critical housing shortage helped increase the median-home price to a record $626,170, a 6.5% increase from May — and up 2.5% from a year ago.
The Inland Empire — Riverside and San Bernardino counties — had the largest price gain at 8.2% among the five regions in the state. Monterey County’s annual increase of 15.5% was the largest in the state.
‘Uneven impact of the coronavirus pandemic’
The statewide median price — half the homes sold for more, the other half for less — was skewed by a larger-than-normal percentage of higher-priced homes selling, according to CAR. Million-dollar homes accounted for 18% of homes sold in June, compared to 15.6% in May. And homes priced below $500,000 were 44% of sales in June, down from 48% in May.
“A new record high in the statewide median price suggests that there is stronger housing demand from more qualified, affluent buyers in this extremely favorable lending environment,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “It also highlights both the affordability and supply issues created by the uneven impact of the coronavirus pandemic as the more affordable segments of the state’s housing markets are recovering at a slower pace.”
The Bay Area, as always, was the most expensive region in the state at $1 million, a 4.2% increase compared to a year ago. San Francisco Country regained the top spot at $1.8 million followed by San Mateo at $1.74 million.
Kings County, better known as Hanford and Lemoore, was the most affordable of the large counties in the state at $265,000, a 7.2% gain from a year ago.