Annual home prices are stuck in a rut
A war abroad that has led to a huge increase in gas prices and much uncertainty about the economy greatly affected an already struggling housing market in March.
Sales dropped to a seasonally adjusted annual basis of 265,320 homes in March, down 3.5% from February and off 2.5% from a year ago, according to the California Association of Realtors.
Annual home sales have dropped at least 2.5% for the past three months, the latest evidence of a housing market where buyers are concerned about the economy, home prices and rising mortgage rates, which have increased with the Iran conflict and unstable situation in the Middle East.
March sales remained below the 300,000 benchmark for the 42nd-straight month, as some buyers canceled deals at the last minute, especially with the roller-coaster ride on Wall Street.
“March home sales were subdued, as higher mortgage rates and stock market volatility kept many buyers on the sidelines,” said CAR president Tamara Suminski. “As both geopolitical tension and interest rates ease for the third straight week, buyers and sellers who have been taking a wait-and-see strategy could return to the market if the conflict in the Middle East continues to stabilize.”
Many homeowners ‘reluctant to sell’
Maybe. But buyers have been cautious for the past several months, closely watching the economy, mortgage rates and prices.
About one of every seven deals fell through last month in California, including a nation-high 18% in Riverside, one of the most affordable housing markets in the state, according to Redfin.
Blame home prices, at least a little.
California’s median-home price – meaning half the homes sold for more, the other half for less – climbed to $889,190 in March, a 7.1% increase from February but a rather modest 0.4% compared to a year ago. Los Angeles and Southern California had the largest annual price increase at about half a percentage point.
The state’s median annual price has increased two consecutive months, good news for sellers.
But many would-be sellers are still holding off listing their homes, with housing inventory declining 17.5% in March from a year ago.
“The number of homes listed on the market remains low compared to last year’s levels even as the spring homebuying season kicks into its highest gear,” said Jordan Levine, chief economist and senior vice president of CAR. “Many homeowners locked in historically low mortgage rates are now reluctant to sell, limiting available inventory. While easing rates are bringing some buyers back to the market, California’s persistent housing shortage remains. This supply-demand imbalance will likely cap sales in the coming months, even as affordability improves modestly.”
Home prices and sales in March compared to a year ago
| Region | Median home price | % gain or loss vs. a year ago | Home sales vs. a year ago |
|---|---|---|---|
| California | $889,190 | +0.4% | -2.5% |
| Bay Area | $1.4 million | No change | +3.2% |
| Central Coast | $1.075 million | -2.9% | +15.4% |
| Central Valley | $493,600 | -0.3% | +1.3% |
| Far North | $381,220 | -1.0 | +17.3% |
| Inland Empire | $610,480 | -0.2% | +2.3% |
| Los Angeles | $838,060 | +0.4% | +2.2% |
| Southern California | $880,000 | +0.3% | +3.0% |
Important note: The regional home sales and prices are not seasonally adjusted.
Source: California Association of Realtors
