A report from the California Association of Realtors stated on Wednesday that lower mortgage interest rates and firming home prices have worked together to drive an increase in home sales in June 2014. The organization, however, added that home affordability continues to be a problem for many consumers, especially those who live in more expensive parts of the so-called “Golden State.”
Total escrow sales of existing single-family detached homes in California were at 394,930 in June, with this figure including adjustments for seasonality and annualization. This was the eighth consecutive month that sales had gone under the 400,000 threshold and the 11th consecutive month in which this statistic declined year-over-year. June’s figure was slightly higher than the revised figure of 389,060 from May, but was also lower by 4.8 percent on a year-over-year basis.
The above figures all represent the number of homes that would be sold over one calendar year should sales maintain the same pace as they had in June. Certain variables are taken into account when adjusting for seasonality.
“While June home sales rose at the statewide level, the market is still constrained by tight supply and low housing affordability in areas of high demand, where job growth is robust and international buyers have a strong presence,” observed Kevin C. Brown, CAR President. He did add that improving home inventory and a gradual increase in home sales have both created more equilibrium in the Californian housing market. “We could see further market normalization in the upcoming months as interest rates remain at the lowest levels we’ve seen so far this year,” he added.
Further, CAR Vice President and Chief Economist Leslie Appleton-Young also cited the recent increase in home prices in California as being one of the most stable in more than two years. “Last year’s frenzied market of multiple offers, which drove sales prices above listing prices, has tapered off as the sales-to-list price ratio has dropped to a more normal level at nearly 99 percent, which signals a return to a more balanced market,” she added. Median pricing in June was down just two percent month-over-month, slipping from $466,320 to $457,160, but was still higher 6.6 percent on a year-over-year basis.