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California home sales come tumbling back down to earth

Home values remain strong

Just one month after posting a nearly four-year high, home sales in California took a step backwards in the month of July, with year-to-date sales falling from previous year for first time in 18 months, according to a new report from the California Association of Realtors.

The CAR report for June showed that closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 450,960 units in June, the highest level in almost four years.

But July’s lackluster sales data undid much of June’s growth, according to the latest CAR report.

CAR’s newest report showed that home sales in California stumbled in July thanks to low inventories and “eroding” affordability.

According to CAR’s report, closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 415,840 units in July, which is down 4.1% from the revised 433,600 level in June and down 5.1% compared with home sales in July 2015 of a revised 438,230.

While home sales remained above the 400,000 pace for the fourth straight month, sales also declined year-over-year for the fifth consecutive month, CAR’s report showed.

“Despite the tight housing supply conditions that have persisted over the past few years, home sales have stayed relatively solid,” CAR President Pat Zicarelli said.

“Even with a shortage of homes on the market, low rates and strong demand have been the norm,” Zicarelli continued. “Some regions, such as the Bay Area, are seeing an uptick in inventory as high prices are motivating sellers to list their properties for sale. While this could ease the inventory somewhat, supply remains tight, and low affordability is expected to be an issue in the short term.”

Additionally, CAR’s report also showed that the statewide median price remained above the $500,000 mark for the fourth straight month, but noted that there are signs of an expected slowing in price growth.

CAR’s report showed that the median price of an existing, single-family detached California home fell by 1.8% in July to $509,830 from $519,410 in June.

Additionally, July’s median price increased 3.9% from the revised $490,780 recorded during the same time period last year.

According to CAR’s report, more homes being sold at the high end of the market (over $1 million) and slightly fewer sales at the lower end (under $300,000) contributed to the year-over-year gain in the median price.

“California’s median home price rose again in July from last year, but the pace of increase has clearly slowed down in recent months,” said CAR Vice President and Chief Economist Leslie Appleton-Young. “While fundamentals such as increasing household formation and strong job creation continue to fuel housing demand and support price growth, low housing affordability and reduced buying power of home buyers has put a cap on how fast the statewide median price can grow.”

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