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Home prices and sales fell statewide in California in June as mortgage interest rates hovered above 7% throughout the bulk of May, when most of these sales opened escrow, according to a new report from the California Association of Realtors.
The number of single-family homes sold statewide last month fell to 270,200, a .8% drop from the previous month of May and a 2.7% drop compared to the same time last year. This marks the second consecutive month that home sales have declined, according to the report.
Home prices saw a slight decline after setting record-highs during the past two previous months. The statewide median home price dropped to $900,720, a .8% dip compared to May’s median price of $908,040, the report shows.
Despite the dip, the state’s median home price remained 7.5% higher than a year ago and exceeded the state’s $900,000 benchmark for the third month in a row. The year-over-year gain marks the 12th straight month of annual price increases, according to the report.
The California Association of Realtors attributes stronger sales of higher-priced properties to the continued growth of the state’s median home price. Million-dollar home sales in California have been rising more rapidly than their more affordable counterparts in the state and now account for 36.3% of all sales. The sale of homes priced at $1 million and higher rose by 2% in June compared to the same time last year. By comparison, the sale of homes priced under $500,000 has declined by 21% over the past year.
“Home prices will likely continue recording positive year-over-year gains in the second half of the year, though the pace of growth could moderate if the rest of the year follows the traditional seasonal pattern,” the report states.
San Mateo and Santa Clara counties
In San Mateo County, June sales fell 8.7% from the prior year and 7.6% compared to the previous month of May. The June median home price of $2.1 million was 3.5% higher than $2 million a year ago and 12.1% less than $2.4 million in May.
Santa Clara County saw June sales slip 2.6% compared to the same time last year and 13% compared to the previous month of May. The June median home price of $1.95 million was 7.1% higher than $1.8 million a year ago and 6.9% less than $2.1 million in May.
“The Bay Area has experienced significant drops in sales because purchasing these high-priced homes are real affordability challenges for the typical homebuyer,” Eileen Giorgi, president of the Silicon Valley Association of Realtors, said. “Many are disappointed that the Federal Reserve has not cut rates as economists had projected, and this has forced both buyers and sellers to return to the sidelines.”
Buyers who can afford to, however, are still willing to pay over asking-price, Giorgi added.
Data from MLSListings indicates that the average sales-to-list price ratio for both counties is still at 107%, which means homes are selling for over asking price. A ratio above 100% typically indicates a seller’s market.
The pace at which homes are selling in each county has remained consistent.
In San Mateo County, the median number of days a home stayed on the market in June was 11 and in Santa Clara County it was eight. Those numbers have remained unchanged since February, according to MLSListings.
Inventory in both counties, though slightly up, is still not enough to meet demand.
According to MLSListings, the number of new listings in San Mateo County in June was down 27% compared to May. In Santa Clara County, that number was down 18% compared to May.
What’s next
With the job market showing signs of cooling in recent weeks and consumers feeling less positive about their future financial well-being, the California Association of Realtors anticipates the economy could slow further in the next two quarters. The housing market could benefit from an economic slowdown if the Federal Reserve starts reducing interest rates in the near term, the report states.
“Moving forward, we’ll likely continue to see home price gains, though at a moderate pace, as long as sellers stay on the sidelines and housing supply remains low. Mortgage interest rates are the key factor holding back both buyers and sellers. As interest rates ease we’ll definitely see a more active marketplace,” Giorgi said.
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.