In a reprieve for Southern California’s sluggish housing market, home sales rose in July from a year earlier. It was the first sales increase in 12 months.
The six-county median price — the point at which half the homes sold for more and half for less — climbed 1.9% in July from a year earlier to reach $540,000.
CoreLogic, which released the data Wednesday, attributed the 3.7% sales gain to a variety of factors, including falling mortgage rates, moderating prices and a rise in inventory. Also, there was one more business day last month compared with July 2018. Accounting for the difference would yield a small drop in sales. But over the last year, monthly sales had been falling by an average of 10% each month.
“The flattening of price growth and lower mortgage rates can make a meaningful difference for some,” said CoreLogic analyst Andrew LePage.
When tracked across the six-county region, price gains were modest compared with years earlier, when homes flew off the market after aggressive bidding wars and the median consistently rose by mid- to high single digits, or more.
Economists have blamed the lack of affordability for drastically slowing the housing market toward the end of last year and causing the region’s median home price to fall slightly in March from a year earlier — the first decline since 2012. But few economists expected a huge decline, citing a relatively health economy and a lack of home building.
Mortgage rates have since come down steadily, which real estate agents say has helped juice demand and firm up prices. The average rate on a 30-year fixed mortgage was 3.55% last week, down from a recent high of 4.94% in November, according to Freddie Mac. The drop would save $352 on a monthly mortgage payment for a $540,000 house.
The drop helped lead to an increase in the number of L.A. County households that could afford a home, even though most remain locked out. In the second quarter, the percentage who could afford a median-priced home stood at 29%, up from 26% a year earlier.
“There’s 20, 25 people in any single open house,” said real estate agent Daniel Nevarez, who specializes in the moderately priced Norwalk and Downey area.
When broken down by county, the market was mixed in July. In Los Angeles County, the median price posted the largest gain since November, while in pricier Orange County the median still fell compared with a year earlier:
- In Los Angeles County, the median rose 5% to $635,000, and sales were flat.
- In Orange County, the median fell 0.8% to $729,000, and sales dropped 1.7%.
- In Riverside County, the median rose 2.9% to $395,000, and sales climbed 8.6% .
- In San Bernardino County, the median rose 4.6% to $340,000, and sales climbed 3.3%.
- In Ventura County, the median was flat at $595,000, and sales climbed 6.2%.
- In San Diego County, the median was flat at $580,000, and sales climbed 10.1%.
Christopher Thornberg, founding partner at Beacon Economics, said the data reveal a market that’s heating up as more buyers react to lower rates and become convinced prices aren’t heading south.
“People are jumping back in again,” he said. Thornberg predicted that will continue, leading to an acceleration in price growth.
July’s home sale data reflect closed deals, meaning many of those home shoppers opened escrow in June and May. Since then, concerns over the economy have grown. That could affect sales and prices in coming months.
According to a Realtor.com survey of 755 active buyers this month, 36% said they expect a recession in 2020, up from 30% in March. Nearly 56% of home shoppers said that if a recession does arrive, they would put their search on hold until the economy improves.