State’s Housing Market Has a Spring in Its Step as Sales Jump
Buoyed by low mortgage rates earlier this year, sales in March of existing home in California jumped nearly 30% above year-ago levels while the median sales price rose 0.5%--the first year-to-year price increase since June 1994, according to a survey released Thursday.
The surge in California home sales--which mirrored a nationwide rise--was the most recent in a series of indicators showing the state’s housing market continuing to strengthen after slumping for nearly seven years.
“The March statistics clearly indicate that the California housing market has joined the state’s expanding economic recovery--marking an end to many lean years in the nation’s largest housing market,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, which issued the state sales report.
But many real estate observers said they expect the real estate market to slow down from March’s feverish pace now that interest rates have spiked up again.
“The spring home buying season started off well because many first-time buyers closed sales using low interest rates secured in January,” said John Tuccillo, chief economist for the National Assn. of Realtors. “We have not yet seen the impact of the recent [interest rate] run-up on sales.”
Nationwide, sales in March of existing single-family homes rose 16% from the same month last year to a seasonally adjusted annualized rate of 4.21 million units, according to the National Assn. of Realtors. The March rate, which was 6.9% higher than in February, is the highest since December 1993.
Statewide, sales of existing single-family homes in March rose 28.6% from last year’s depressed levels to a seasonally adjusted annualized rate of 396,660 homes, according to the monthly survey compiled by the California Assn. of Realtors. The March sales figures, which do not include new homes and condominiums, were up 0.8% from February’s rate of 506,430 homes.
Although sales were strong, it was the small but rare gains in median sales price that had the real estate trade group crowing. Statewide, the median sales price of an existing single-family home rose 0.5% from the same month last year, to $175,270. The March median rose 3.1% from $170,860 reported in February.
The price rise, if it continues, could signal the end of the region’s nearly 7-year-long decline in residential property values. The decline has sapped many homeowners of their equity and scared away potential buyers, who fear further price erosion.
“We are now seeing significant home price increases on a monthly basis and from a year ago throughout the overall San Francisco Bay Area, the Silicon Valley and in the Monterey region,” said Appleton-Young of the California Realtors group.
The price picture in Southern California, however, remained mixed. In Los Angeles County, for example, the median sales price in March rose 2.4% from the previous month to $174,360. However, the March sales price is 0.7% below the median for the same month last year.
Prices in Orange County fared even worse, with the median falling 4.1% from the previous month to $204,070. The county median is 4.3% below that of March 1995.
In the Riverside-San Bernardino area, the March median rose 0.8% from February to $117,400, but was down 1.2% from comparable year-ago figures. Ventura County experienced some of the strongest price gains in the region, with the median rising 0.6% from February to $201,380 and up 4.1% from March of last year.
The sharp jump in mortgage rates since January, however, has slowed sales activity in many areas, real estate agents say. Since January, 30-year, fixed-rate mortgages have risen from a nationwide average of 7.03% and are at 7.92% this week, according to a survey released Thursday by the Federal Home Loan Mortgage Assn. Last week, the average rate stood at 8.05%.
Stephanie Vitacco, an agent in Northridge for brokerage Fred Sands, said sales have settled down in recent weeks with the rise in rates.
“I had a couple of deals fall out because of it,” Vitacco said. “It was painful.”
In a separate report released Thursday, the Labor Department said the number of new claims for jobless benefits rose by 13,000 last week to a seasonally adjusted 372,000.
It is the highest level since claims totaled 406,000 in the week ended March 30, when applications were inflated by the General Motors Corp. strike.
Associated Press contributed to this report.
* CALIFORNIA RECOVERY
Personal incomes in California shot up 6% in 1995, another sign of the state’s economic comeback. D2
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Coming Back
California median single-family home prices, in thousands of dollars:
March 1996: $176.2
Source: California Assn. of Realtors
California Existing Home Sales
Seasonally adjusted annual rate, thousands of units:
March 1996: 510.3
Source: California Assn. of Realtors
