California Home Sales Rose in February

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 421,670 units in February, according to information collected by the California Association of Realtors from more than 90 local Realtor associations and MLSs statewide.

February’s sales total was up 6.6% from the 395,700 level in January, marking the first time in three months that sales jumped above the 400,000 benchmark. February also marked the eighth consecutive month of year-over-year sales increases. The robust sales gain observed in the last few months may not be sustained as the recent financial market turmoil triggered by the coronavirus outbreak will likely have a negative impact on home sales in the coming months.

“As the coronavirus pandemic worsens, the housing market is expected to decline precipitously in the coming months, particularly in counties and cities with a “shelter in place” mandate, where open houses and home showings cannot be held,” said 2020 C.A.R. President Jeanne Radsick, a second-generation REealtor from Bakersfield, Calif. “Additionally, sales in escrow may be delayed by the closure or limited availability of all the essential services related to a home sale, such as financing, title, escrow, recording or by buyers who may have backed out of a purchase due to coronavirus concerns.”

A C.A.R. flash poll conducted between March 14-16 found that more than half (54%) of Realtors had clients who backed out from buying a home because of the coronavirus, and less than one-half (45%) had clients who backed out from selling a property.

The median price inched up 0.8% from January’s revised $575,160 to $579,770 in February. The median price climbed 8.5% from $534,120 in February 2019. February marked the third straight month with a year-over-year gain of more than 7%, fueled by low interest rates.

“The economic impacts of the coronavirus pandemic are becoming more pronounced as uncertainty continues in the financial markets, consumer spending declines and unemployment insurance claims rise—all factors that impact the housing market,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The housing market condition is expected to deteriorate accordingly in the near term, with both sales and prices being downgraded from our original 2020 housing forecast in the coming months.”

Other key points from C.A.R.’s February 2020 resale housing report include:

• At the regional level, non-seasonally adjusted sales rose from last year in all major regions, except the Bay Area. Southern California increased the most with 12.5 %, followed by Central Coast (7.6%) and Central Valley (2.3%). 32 of the 51 counties tracked by C.A.R. experienced year-over-year growth, with Siskiyou gaining the most from last year at 100.0 percent. Tehama had the biggest drop, with sales falling 40.5% on a year-over-year basis.
• Median prices in all regions increased in February from last year, with Central Coast up the most at 10.0%, followed by Southern California (8.4%), Central Valley (6.3%), and the Bay Area (5.0%).
• Forty-one of the 51 counties tracked by C.A.R. reported a year-over-year gain in price in February, with Plumas gaining the most at 24.4% from last year. Of the 10 counties that experienced a price drop from last February, Mariposa had the biggest decline of 11.2%.
• California housing supply continued to increase in February from the prior month as the market geared up for the spring home-buying season, with the number of active listings inched up by 0.9% from January. The month-to-month increase is on par with the average January to February increase of 0.8% recorded between 2008 and 2019. On a year-over-year basis, however, active listings continued to drop by more than 25% for the third consecutive month. Since September of last year, the number of active listings decreased an average of 21.8% from the prior year.
• The sizable drop in active listings, together with the increase in sales, continued to put downward pressure on the Unsold Inventory Index (UII), resulting in a drop in the index to 3.6 months, down from 4.6 months a year ago.
• With new coronavirus cases continuing to spread across the nation and a declaration of a national emergency, many potential sellers will likely delay putting their homes on the market, which may lead to fewer new listings. On the other hand, if homebuyers postpone their plans to enter the market due to their dimmer financial outlook, a sharp sales decline will result in an increase in unsold inventory in the short term.
• The median number of days it took to sell a California single-family home fell significantly from a year ago, declining from 33 days in February 2019 to 23 days in February 2020.
• C.A.R.’s statewide sales-price-to-list-price ratio* was 99.1% in February 2020, up from 98.0 in February 2019.
• The statewide average price per square foot** for an existing single-family home was $283 in February 2020 and $271 in February 2019.
• The 30-year, fixed-mortgage interest rate averaged 3.47% in February, down from 4.37% in February 2019, according to Freddie Mac. The five-year, adjustable mortgage interest rate was an average of 3.26%, compared to 3.87% in February 2019.