‘We’re seeing many would-be buyers taking a break’
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California’s red-hot housing market could be cooling off, or at least getting lukewarm.
May home sales dipped 2.7% compared to April — but were up 87% from a year ago, though the figure is greatly skewed by the Covid-prompted lockdown that halted most sales in May 2020, according to the California Association of Realtors.
Month-to-month home sales have dropped four of the past five months, possible signs of a slowdown. Six of the state’s seven regions reported sales declines compared to April, but all were up significantly from a year ago, including 100% increases in the Bay Area and the Central Coast.
The state’s median home price — meaning half the homes sold for more, the other half for less — inched up to a record $818,260, a 0.5% gain from April and a 39% increase compared to a year ago. The annual $230,190 gain was the largest-ever increase, and the second straight month of 30%-plus increase.
Despite the annual price and sales growth, the blistering housing market has some evidence of a few cracks, housing experts say. Few active listings, fast-rising prices and bidding wars are taking their toll on home shoppers, says CAR president Dave Walsh.
“The overheated housing market is showing signs of a much-needed cooling and could be a sign of waning buyer interest as the torrid pace of home price increases and buyer fatigue adversely affected demand,” he says. “We’re seeing many would-be buyers taking a break and hoping to see more listings as the economy reopens and prospective sellers list their homes for sale.”
Listings increase, reaching the highest level in six months
Active listings increased 6.6% in May compared to April, reaching the highest level in six months. But active listings were still off 20% from a year ago.
Bidding wars have greatly increased home prices, with the average home selling for 104% above the listing price, according to the statewide association. But housing experts are hopeful the gain in listings in May will continue through the summer.
“A lack of housing inventory continues to push up prices, and modestly higher interest rates, increased competition, and declining affordability have caused some buyers to become discouraged,” says Jordan Levine, vice president and chief economist for CAR. “Fortunately, new listings have finally started to rise, which could help to sustain a higher level of home sales deeper into summer by providing much-needed supply.”
Longtime business journalist-turned-communications executive who enjoys reporting on residential real estate in his spare time.