California’s expensive housing market continues to hold some buyers out of the fray, and it’s hurting the bottom line as the state’s home sales dropped to a four-year low this past August, according to CoreLogic.
The data analytics company estimated there were 42,440 new and existing homes sold in California in August, down 0.2 percentage points from July and 2.8 percentage points compared to August 2018. It’s a sharp departure from the historical norm in the Golden State, as sales activity typically inches higher between July and August. Since 2000, the average change in sales over that two-month period is a 2.8 percentage-point gain.
Furthermore, California’s sales have only increased on an annualized basis once since August 2018. That occurred in July of this year.
With sales flagging, the state’s median home price has started to descend after hitting an all-time high of $509,000 this past June. In August, the median price was $499,000, a 1% annual increase but an 0.2% decrease from the $500,000 median price of a month earlier. The annualized gain also is much less than the 6.2% jump of August 2018 and the 8.1% yearly gain of August 2017.
Pricey regions, in particular, are seeing home values stagnate or trend downward. In the six-county Southern California region, for example, the median price was flat year over year in August, thanks in part to an annual sales decrease of 1.2%. The San Francisco Bay Area saw home sales fall to a nine-year low for the month of August, with the median sales price down 2.4%. That was the fourth straight month the region experienced a year-over-year decline in the median sales price.
CoreLogic postulated that the August sales decline was likely tempered due to falling mortgage rates since the start of summer. During the first half of 2019 (before rates began to drop), sales fell nearly 9% from the same period in 2018. Undoubtedly, the low-rate structure has motivated some buyers — especially those in expensive areas like Los Angeles and the San Francisco Bay Area — to enter the market.
“For some, this year’s drop in mortgage rates has been meaningful,” CoreLogic analyst Andrew LePage said. “While the median price paid for a home last month [in the San Francisco Bay Area] was down 2.4% compared with August 2018, the principal-and-interest mortgage payment on that median-priced home was 13% lower because of a roughly 1 percentage point drop in mortgage rates.
“The combination of the drop in the median price as well as mortgage rates translates into a savings of about $450 on the monthly payment for the median-priced [Bay Area] home, assuming a 20% downpayment and a fixed-rate, 30-year loan.”