California home sales and median price backpedaled on a monthly basis in February, but still showed strong gains on a yearly basis, according to the California Association of Realtors. At the regional level, the Inland Empire and the Los Angeles metro area experienced healthy annual sales gains, while affordability and inventory pressures continue to stifle the San Francisco Bay Area market. Only Santa Clara County showed monthly and yearly gains in both home sales and median price among the nine-county Bay Area.
Information from the state Realtor group indicates statewide February home sales were down 4.7 percent from the 420,100 level in January and up 4.9 percent compared with 381,770 home sales in February 2016, the weakest sales level in 2016.
"While it's encouraging to kick off the year with back-to-back yearly sales increases, moving forward, California's housing market could lose steam in the long term as the Fed begins to adjust the federal funds rate," said Geoff McIntosh, president of the state Realtor group. "In the short term, however, the specter of higher interest rates may push buyers off the fence to purchase a home before mortgage rates move even higher."
Even if the median price was down 2.2 percent from $489,680 in January and hit $478,790 in February, home prices remain seasonably strong. February's median price still saw a 7.6 percent increase from $444,780 recorded a year ago. The annual gain was the largest year-over-year increase since January 2016 and was higher than the three-month average of 4.5 percent prior to February 2016.
"Despite a strong sales start for the year, the housing supply shortage in California continues to cast doubt on whether the sales momentum can be carried forward into the spring home buying season," said Leslie Appleton-Young, the state Realtor association's senior vice president and chief economist.
The number of active listings statewide has been on a downward trend for the past 20 months and has shown no signs of improvement. "As we move into the spring home buying season, we should see a marginal increase in listings, which will be offset by a pickup in sales. The inventory level is not likely to get better in the upcoming months," said Appleton-Young.
February home sales in Santa Clara County were up 7.8 percent on a monthly and yearly basis. The median sales price of a Santa Clara County home in February was $1,100,000, up 18.6 percent from the January median of $927,500 and 16.7 percent from the February 2016 median of $942,500.
Denise Welsh, president of the Silicon Valley Association of Realtors, said while the region continues to struggle with a tight housing inventory, Realtors are busy. She indicated the Federal Reserve recently increased the key short-term rate for the third time since December 2015, but the hike should not hurt the housing market.
"The rate hike will most likely affect credit cards, home equity loans and adjustable rate mortgages, but it should have little effect on mortgage rates. The Feds' decision to increase rates means the economy is growing and that the federal government is confident that the economy will continue to grow," said Welsh.
Welsh said sellers will still get a good price for their home, though prices may not be as high as in the past. "It is still a good time to sell, especially in Silicon Valley, where demand for homes is strong and there is a shortage of inventory," said Welsh.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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