Tight housing inventory tamped down the benefits of the lowest interest rates in years and held back California home sales in December while boosting prices, said the California Association of Realtors. The median home price recorded the second highest price of the year and its largest year-over-year increase since May 2014.
California’s housing supply recorded back-to-back drops of more than 20% percent at the end of 2019, with active listings declining 26.5% in December after a 22.5% decrease in November. The median price was up 4.3% from November’s $589,770 to $615,090 in December and climbed 10.3% from $557,740 in December 2018. The year-over-year price increase was the largest since May 2014 and the first double-digit price increase in more than five years. The statewide median home price for the year as a whole was $592,450, an increase of 4.0% from a revised $569,480 in 2018.
“With housing supply dropping to the lowest level in nearly seven years, California experienced an unusual jump in its median price at the end of the year when the market is supposed to cool down,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “While low rates have been fueling demand in the second half of 2019, supply constraints continued to put a drag on the market and undercut the positive effect of low rates. The surge in price is a byproduct of the imbalance between supply and demand as market competition continues to heat up.”
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 398,880 units in December, down 1% from the 402,880 level in November. Sales were up a 7.4% from December 2018. For the year 2019, annual home sales fell for the second consecutive year to a preliminary 397,910 closed escrow sales in California, down from 2018’s pace of 402,640.
On a yearly basis, sales in the Central Coast increased the most at 42.4%, followed by the San Francisco Bay Area (16%) and Los Angeles (15.6%). The Inland Empire and Central Valley rounded out the remaining regions with annual increases of 13.3% and 11.6%. Forty of the 51 counties tracked by C.A.R. experienced year-over-year sales growth. Median prices increased from last year in all regions except the Central Coast, with Southern California up the most at 10%, followed by the Central Valley (7.7%) and the Bay Area (6.9%). The median price in the Central Coast dipped from a year ago by 2.2% but edged up 0.7% from November.
