The lowest mortgage rates in 18 months failed to spark the California housing market in October as sales stayed flat and home prices increased at the slowest pace since early 2012, according to the California Association of Realtors (CAR).
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 396,220 units in October, according to information collected by CAR. Sales in October were unchanged from a revised 396,400 in September but were down 1.9% from a revised 404,000 in October 2013.
October marked a full year that sales were below the 400,000 level. The statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
“As we move into the off-peak home buying season, prospective buyers who may have delayed their purchase earlier in the year should take advantage of the current favorable market conditions and resume their home search,” said Chris Kutzkey, 2015 president of CAR. “With home prices stabilizing and interest rates dropping back down to levels not seen since mid-last year, housing affordability should improve to benefit buyers.”
The median price of an existing, single-family detached California home decreased 2.3% from September’s median price of $461,370 to $450,620 in October but was up 5.4% from the revised $427,540 recorded in October 2013. The statewide median home price has been higher on a year-over-year basis for more than two years.
“While home sales essentially were unchanged statewide, there were pockets of strong sales growth, especially in coastal regions. The Bay Area, for example, continued to exhibit strong price gains, decent sales growth, and extremely low housing inventory,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “If current price and rate conditions persist, overall home sales should improve for the rest of the year.”
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Key takeaways from the October 2014 resale housing report:
• Housing inventory slipped in October, with the available supply of existing, single-family detached homes for sale dropping from 4.2 months in September to 3.8 months in October. The index was a revised 3.3 months in October 2013. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered typical in a normal market.
• The median number of days it took to sell a single-family home edged up in October, up from a revised 40 days in September to 41.9 days in October and from 33.4 days in October 2013.
• Multiple bid offers for properties has waned, and properties are again generally selling below the list price. The statewide measure suggests that homes are selling at 97.5% of the list price. This is down from a 99.1% ratio at the same time last year. The Bay Area is the only region where homes are selling above list prices and are generally selling about 1.3% more than asking price.
• The median price per square foot for an existing single-family California home was $216 in October 2014, an increase of 0.2% from the previous month and a 6.4% increase from October 2013. Price per square foot at the state level has been showing an upward trend since early 2012. In fact, it has been rising on a year-over-year basis for 33 consecutive months. San Mateo County had the highest price per square foot in October with $659 per square foot (SF), followed by Santa Clara ($521 SF), and Santa Cruz ($399 SF). The top three counties with the lowest price per square foot in October were Siskiyou ($104 SF), Glenn ($110 SF.), and Madera ($111 SF.).
• Mortgage rates fell in October, with the 30-year, fixed-mortgage interest rate averaging 4.04%, down from 4.16% in September and down from 4.19% in October 2013, according to Freddie Mac. The October 2014 average 30-year fixed rate was the lowest since May 2013, just before the Federal Reserve announced its intention to taper the bond buying program. Adjustable-mortgage interest rates in October also fell, averaging 2.41%, down from 2.43% in September and down from 2.63% in October 2013.