Southland Home Sales, Prices Show Resilience
Despite a drop-off in buyers, the region’s housing market showed surprising strength last month, with sales remaining at high levels and home prices advancing at a good clip, according to a report released Tuesday.
Overall, new- and existing-home sales in Los Angeles County slid 6% in November. But that is compared with an exceptionally strong November a year ago. And the median price of homes last month surged 10% to a near-record high of $230,000, said DataQuick Information Systems.
The housing market nationally also is looking brighter.
A separate government report said Tuesday that new-home construction surged more than 8% in November from the prior month, confounding analysts who had expected a decline. The burst of activity, especially in the Northeast and Midwest, was attributed in part to the unseasonably mild weather but also reflected a pickup in sales and increased optimism among builders.
The construction in November marked the biggest monthly gain since January, and the report triggered a surge in home builders’ stocks that helped boost the broader market. Prices for future lumber delivery also rose sharply on Tuesday’s news from the Commerce Department.
Some analysts said they expected a home-building retreat in December and sluggish activity until spring. But the National Assn. of Home Builders said it now appears that builders will break ground on 1.6 million units this year, up about 2% from last year.
“Housing has been one of the bright spots in the economy all year, and the prospects for 2002 also are positive,” said Bruce Smith, president of the NAHB and a home builder in Walnut Creek, Calif. He cited low mortgage rates and improving consumer confidence for the improved outlook.
The housing market in the Southland has held up well despite a weakening economy made worse by the Sept. 11 attacks. Despite expectations of a big falloff in activity, home sales in Los Angeles County rose by 5% in October, and the 6% decline last month was considered moderate given the broader economic downturn.
DataQuick’s report, which is based on escrow closings, found slower activity in Orange County, where sales last month fell by 15%. But John Karevoll, the DataQuick analyst who compiles the monthly report, said the decline might have been exaggerated by the low inventory and escrow delays caused by the home refinancing boom.
At any rate, he said, Orange County’s sales total for November of 3,603 was considerably higher than the average for that month over the last decade. The median price of homes in Orange County jumped nearly 15% from November a year ago, to a record $322,000.
“I think the market continues to surprise people with its strength,” Karevoll said. “A month ago, if you’d asked analysts what November would look like, they would have expected a bigger drop-off. We really don’t see the effects of Sept. 11 in the numbers.”
The median price of homes in the Southland, particularly in Orange County, has been boosted by the low inventory. The number of existing homes for sale in both counties remains near record lows. And despite the recent heavy job losses in California, the Southland economy has held up better than the Bay Area’s.
“The [housing] decline has been relatively muted, which gives some hope that once the initial impact of Sept. 11 has dissipated, the market should go back to normal,” said G.U. Krueger, an analyst at Institutional Housing Partners, a housing venture capital firm in Irvine.
Despite November’s surge in new-home construction nationwide, home building in California continues to lag. Through October, builders had pulled permits for 123,670 units of single-family and attached homes, according to the latest figures from the Construction Industry Research Board, a Burbank firm. That figure is about half the number of new homes state economists believe are needed annually to support growth.
