February Home Sales Soar 13% Across the State : Real estate: Low interest rates generate the best showing in existing accommodations in more than five years.
California’s convalescing housing market showed substantially increased vigor in February as low interest rates sparked the sharpest month-to-month increase in existing home sales in more than five years, the California Assn. of Realtors reported Tuesday.
Statewide, sales of existing, single-family detached homes rose 13% on an annualized basis to 461,380 from 408,430 in January.
It was the sharpest one-month gain since December, 1986, when sales increased more than 17% from the previous month. February marked the fourth consecutive monthly increase in sales.
The increase in sales, however, follows an especially weak period of home buying a year ago when hostilities in the Persian Gulf slowed purchases. And although many experts are heartened by the numbers, they say the overall improvement masks a weakness in entry-level sales, which in total volume is the largest market segment.
Until recently, lower-priced, entry-level California homes had maintained the strongest sales pace during the recession.
But last month, high-priced coastal areas such as San Francisco, Monterey, Orange County and Santa Barbara posted huge increases, while home sales fell in many lower-cost inland areas, such as Sacramento and Riverside.
Experts say the trend reflects growing confidence in the economy among relatively well-paid white-collar workers in such industries as health care, biotechnology and computers who have remained mostly unscathed by the recession and feel that they now can afford to buy in expensive coastal areas with lower interest rates.
But the experts say there appears to be mounting concern about jobs among construction, government and aerospace workers that has dampened buying activity in once-red-hot outlying areas, including San Bernardino and Riverside counties.
“In the high-priced markets there is a perception that the California economy is not going to go down much further and that interest rates are not going to go down much further; so for people who have been waiting to buy, there is a feeling that now is the time to do it,” said James Z. Pugash, director of Montgomery Securities Real Estate in San Francisco.
Pugash added that “rising interest rates are beginning to dampened the enthusiasm of entry-level buyers. We should be very concerned about that.”
The rate for 30-year-fixed mortgages rose to a nationwide average of 9.03% last week, the first time the rate has exceeded 9% since September, according to the Federal Home Loan Mortgage Corp. By contrast, in January, when most interest rate commitments were made for the 461,380 California homes sold in February, 30-year-fixed mortgages fell to as low as 8.2% in California.
“A rise in the mortgage rates is clearly going to affect some people, but rates are still very low by recent historical standards,” said Mark C. Coleman, director of the Real Estate Group of Deloitte & Touche in Orange County. “People perceive anything under double digits as low interest.”
Despite the concern over interest rates, many realtors say they don’t detect any waning in home buying and report that they are enjoying the best sales they’ve had in more than a year.
Prudential California Realty, one of the state’s largest independent residential real estate firms, reported that its sales for February were up 31% from a year ago.
“Our statistics . . . clearly indicate that the market is on a solid upturn,” said Rick Merrill, the firm’s president and chief operating officer. “Buyers have realized that home prices and interest rates are now at very attractive levels and this affordability, coupled with some recent favorable economic indicators, is boosting the residential market.”
California Home Sales
Percent Percent Percent change change change in sales in price in price activity Median from from from price Jan., ’92 Feb., ’91 Jan., ’92 Statewide (single family) $196,630 1.5 0.7 13.0 Statewide (condominium) $145,280 0.3 4.5 -12.6 Central Valley $120,470 2.3 6.0 -7.4 High Desert* $111,060 0.3 -3.1 0.5 Los Angeles $213,230 -1.3 6.5 -6.9 Monterey* $208,550 -14.8 -14.3 7.2 Northern California* $136,670 0.4 2.0 -25.0 Northern Wine Country $193,330 3.1 7.7 -21.5 Orange County $230,930 -2.1 -2.4 15.6 Palm Springs/ Lower Desert* $113,680 -5.3 -6.9 -19.4 Riverside/ San Bernardino $139,340 1.7 6.2 -10.2 Sacramento** $135,000 0.0 3.1 -18.2 San Diego $177,570 -2.2 -0.8 -10.7 San Francisco Bay Area $239,670 -1.2 -0.6 4.6 Santa Barbara* $215,480 7.0 12.8 12.8 Santa Clara $244,600 -0.8 0.1 16.5 Ventura $223,260 -2.4 -3.3 -17.7
Percent change in sales activity from Feb.,’ 91 Statewide (single family) 14.8 Statewide (condominium) 15.0 Central Valley 8.1 High Desert* 4.2 Los Angeles 7.4 Monterey* 44.8 Northern California* 17.9 Northern Wine Country 5.7 Orange County 19.2 Palm Springs/ Lower Desert* 3.0 Riverside/ San Bernardino -11.3 Sacramento** -2.8 San Diego 6.6 San Francisco Bay Area 21.5 Santa Barbara* 50.0 Santa Clara 23.8 Ventura 14.6
Regional and condo sales data not seasonally adjusted. Reported month-to-month changes in sales activity may overstate actual changes because of the small size of individual regional samples. Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home. Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.
*Because of the small sample size in these areas, prices and activity changes may be overemphasized.
**Source: Sacramento Assn. of Realtors
Source: California Assn. of Realtors
