Diminishing affordability slowing market, A.A.R. reports
California’s housing market ticked upward in March to reach the highest level in four months, but sales were still lower than a year ago as declining housing affordability continues to put downward pressure on the market, the ARCADIA ASSOCIATION OF REALTORSA!X (A.A.R.) said.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 367,000 units in March, according to information collected by C.A.R. from more than 90 local REALTORA!X associations and MLSs statewide. March marked the fifth straight month that sales were below the 400,000 level and the eighth straight decline on a year-over-year basis. Sales in March increased 1.4 percent from a revised 361,790 in February but were down 12.3 percent from a revised 418,310 in March 2013. The statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
“While the demand for housing was up from February, the market is taking a hit from lower housing affordability compared to a year ago, which led to a decline in home sales from last year,” said 2014 C.A.R. President Mike Vachani. “Moreover, concerns over tighter lending standards and increased borrowing costs are also contributing factors to the sluggish market as they both negatively impact the bottom line of home buyers who obtain financing through mortgages.”
The statewide median price of an existing, single-family detached home reversed a two-month decline and rose 7.7 percent from February’s median price of $404,250 to $435,470 in March. March’s price was 14.9 percent higher than the revised $379,000 recorded in March 2013, marking more than two full years of consecutive year-over-year price increases and the 21st straight month of double-digit annual gains, as sales of higher priced homes made up a larger share of the market compared to a year ago. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.
“While housing inventory has loosened since last year, it’s still below what’s considered typical in a normal market,” said A.A.R. CEO Andrew Cooper. “Many of the listings continue to be priced above what the market will bear and are not moving. As such, even with improved home prices over the past year, new listings are lagging because would-be sellers who have limited options on where to move are hesitant to put their properties on the market.”