California home sales started to temper out in August, following the previous month’s tumble in sales.
Not too long ago, California’s housing market reached a nearly four-year high, but that momentum came to a halt in July when sales fell from previous year for first time in 18 months.
Now, according to the August report from the California Association of Realtors, the market is likely to stay down as low housing affordability and a tight supply of homes for sale cut into demand, especially in high cost areas of the San Francisco Bay region.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 420,360 units in August, the report cited.
The report noted that the statewide sales figure represents what would be the total number of homes sold during 2016 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
While August was up 1.1% from the revised 415,840 level in July, it was down 2.2% compared to home sale a year ago, which came in at 429,900.
Home sales remained above the 400,000 pace for the fifth straight month, but sales have declined year over year for the sixth consecutive month.
"We are seeing the market tempering," said CAR President Pat "Ziggy" Zicarelli.
"Two of the region's least affordable counties – Marin and Santa Clara – saw sales fall from a year ago, while Contra Costa and Sonoma counties experienced more modest slowdowns,” Zicarelli stated.
“Conversely, in many parts of the Central Valley, where homes are more affordable and demand has been relatively strong, home sales posted healthy increases,” said Zicarelli. “Likewise, sales of condominiums statewide were strong, thanks to their relative affordability."
For the fifth straight month and at its highest level in nearly seven years, the statewide median price remained above the $500,000 mark.
However, the report added that there are signs of an expected slowing in price growth.
The good news, CAR Vice President and Chief Economist Leslie Appleton-Young explained, is that jobs and incomes have continued to improve for workers in the state. However, as a result, “We're seeing more demand by primary homebuyers at the lower end of the market where inventory is tightest, which is pushing home prices higher,” Appleton-Young said.
"With active listings in the lowest price tier dropping more than 27% from the previous year, the median home price of the lowest priced segment of the market was pushed up from $185,000 last year to $205,000 this August, while the next price segment of the market has risen from $300,000 to $320,000," Appleton-Young continued.
The median price of an existing, single-family detached California home was up 1.7% in August to $526,580 from $517,650 in July. August's median price increased 5.8 percent from the revised $497,520 recorded in August 2015.