Sales in Higher-Priced Segments Remained Strong after Peak Season By Oscar Wei, senior research analyst
California home sales experienced its first year-over-year decline after five consecutive months of increase. Sales of existing single-family homes decreased 1.2 percent to 484,240 in September from 490,280 in the same month of last year. The sales level dropped below the 500,000 benchmark for the first time in 2012 and was at the lowest level since July 2011. Despite the decline, sales were still up 5.6% for the first nine months of the year when compared to 2011. The growth in the existing housing market continued to be fueled by strong sales in higher-priced segments of the market as supply shortage remained a constraint on sales in the lower price segments.
Meanwhile, the statewide median price rose 19.5 percent to $345,000 from $288,700 in September 2011, continuing its year-over-year increase for the seventh straight month. It was also the third consecutive month with a double-digit year-over-year gain. The increase in price was due to upward price pressure resulting from the limited supply of inventory, as well as more demand in higher-priced homes. The combination of these two factors led to the change in the mix of sales, which was the primary contributor to the jump in the statewide median price.
Regional Housing Markets
With their economy growing faster than the rest of the state, sales in the Bay Area were strong in September with all counties showing increase on a year-to-date basis. Sales growth took a breather in September with home sales in the region declining slightly by 1.7 percent from last year, but six of nine counties continued to show year-over-year gain. Home prices remained solid for the region, as all counties except Marin improved from the same month of last year.
Southern California, in general, have had a healthy increase in sales over 2011 so far this year, with four of seven counties growing by double-digits on a year-to-date basis when compared to last year. The two counties with half or nearly half of the sales being distressed sales – Riverside and San Bernardino, however, continued to be adversely affected by the shortage in supply of distressed properties in the area. Sales in Riverside dropped 8.5 percent in September on a year-over-year basis, while San Bernardino decreased 19.4 percent when compared to September of last year. All counties’ median prices followed the statewide trend and surged by more than 10 percent from last year, except Ventura, which increased 4.2 percent on a year-to-year basis.
The Central Valley region has also been experiencing sales decline due to current supply constraint conditions, especially in the distressed market. Ten of the eleven counties in the region had double-digit year-over-year decreases in sales in September. A big portion of the sales in the region has been in the distressed market in the past couple years. With inventory in most counties remaining at record low levels, the extreme supply shortage has had a negative impact on the housing demand. Six of eleven counties had an unsold inventory index of 3 months or less and eight of the eleven counties had inventory level below that of the state. The lack of supply also exerted upward pressure on home prices and the regional median price in September increased 11.5 percent from last year.