Home Sales Up : 6.3% in State, 4.6% Nationwide : Real Estate: Analysts credit low interest rates and say buyers are beginning to think that prices may have bottomed out.
Home sales rose 6.3% in California and 4.6% nationwide in May, two industry trade groups said Friday, fueling hopes that the modest housing rebound that began in the spring will carry over into the summer sales season.
Single-family homes in the state sold at a 404,220-unit seasonally adjusted annual rate last month, the California Assn. of Realtors said, up from April’s 380,200 rate. Sales also rose in all four of Southern California’s biggest markets.
In a separate report, the National Assn. of Realtors said California’s gains helped push sales nationwide to a 3.61-million annual rate, up from the 3.45-million rate posted in the previous month and in May, 1992.
Last month’s national sales level was the highest since January and put the U.S. housing market on track for its best sales year since the boom days of the late 1980s, even as the national economy as a whole struggles to recover.
The 4.6% rise in sales nationwide was broad-based, the National Assn. of Realtors said. Sales jumped 7.9% in the South, 4.2% in the Northeast, 2.7% in the West and 2.1% in the Midwest.
Analysts attributed the gains in California and the rest of the nation to continued low interest rates and a growing feeling among consumers that home prices may have bottomed out. California’s home prices steadily dropped through the last half of 1992 and into February of this year, but have since stayed in the $191,000-$194,000 range.
The average rate for a 30-year fixed mortgage was 7.47% in May, down from 7.48% in April and 8.67% a year earlier, according to the Federal Home Loan Mortgage Corp.
“Most people seem to figure that interest rates and prices won’t go any lower, so they’re finally whipping out their checkbooks and taking the plunge,” said Robert Dederick, chief economist for Northern Trust Co. in Chicago.
“The sales numbers aren’t heart-stopping, but we’ve seen a pretty healthy pace over the past few months that should be carried over into the summer,” he said.
The California Assn. of Realtors said sales rose 2.9% from April to May in Los Angeles County, 4.8% in San Diego County, 11.6% in the Riverside-San Bernardino area and 10.1% in Orange County.
The median price of a home in the Riverside-San Bernardino area stood at $137,020 in May, up 3% from April. Median prices for the other Southern California counties were little changed at $202,010 in Los Angeles, $219,290 in Orange and $177,810 in San Diego.
Certainly, no one is predicting that California’s housing market will bounce back quickly given the generally poor condition of the state’s economy. The UCLA Business Forecasting Project said this week that hopes for a real estate upturn in 1993 have been “all but erased.”
Still, “sales are definitely picking up,” said Coldwell Banker’s Donald Pfaff, who sells homes in Costa Mesa and Newport Beach. “A lot of my buyers are tenants who have been paying high rents and now realize that the drop in mortgage rates can put them into a home without raising their monthly housing costs.”
Leslie Appleton-Young, an economist for the California Assn. of Realtors, said there is a 12-month supply of homes for sale in California today, meaning it would take a full year for all those houses to be sold at the May sales rate.
