California Home Prices Benefit from Short Inventory, Sales Suffer

BY JANN SWANSON
California Home Prices Benefit from Short Inventory, Sales Suffer

California house prices have now risen on an annual basis for a full year according to the California Association of Realtors® (C.A.R.).  The median price of an existing single family home sold for $333,800 in February, down 1 percent from the January median of $337,360 but an increase of 24.2 percent from February 2012.   In addition to marking a full year of annual price increases, February was the eighth consecutive month with annual increases in double digits.

Sales of existing single-family detached homes in February were at a seasonally adjusted annual rate of 416,610 units in February, down 0.9 percent from January and 5.9 percent from 442.660 sales in February 2012.

C.A.R. said sales are being affected by a lack of inventory.  The February Unsold Inventory Index for existing, single-family detached homes was 3.6 months in February, up from 3.5 months in January, but down from 5.4 months in February 2012.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered normal.

Homes sold more quickly in February, with the median number of days it took to sell a single-family home decreasing to 34.2 days in February, down from 36.6 days in January and down from a revised 57.4 days for the same period a year ago.

"The demand for homes remains solid, but a shortage of homes for sale, especially in the lower-priced segments, is negatively impacting housing sales," said C.A.R. President Don Faught.  "Sales of homes priced above $500,000 continue to be strong, posting nearly 31 percent higher than a year ago, while homes priced below $300,000 were down 27 percent from last February due to fewer available homes for sale."

 "With housing inventory dropping nearly 39 percent from a year ago, supply constraints continued to propel strong gains in the median price, but also intensified market competition," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  "With an imbalance between supply and demand, home buyers have been fiercely competing with each other.  More than half of home sales are receiving multiple offers, with homes getting an average of four to five offers, and some even more."