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California's housing market continues to improve
Prices also up, reaching their highest level since last August

by Jeb Bing

California's housing market continued to show signs of improvement in June, as home sales experienced solid gains annually and home prices reached their highest level since August 2010, the California Association of Realtors (CAR) reported this week.

"Although home sales throughout the state continued to improve compared with a year earlier, we did see a modest dip compared with May," said CAR President LeFrancis Arnold.

"Potential home buyers are frustrated by the limited number of homes on the market for sale and are growing discouraged by signs that the economy is slowing," he said.

Closed escrow sales of existing, single-family detached homes in California declined 8.6% from May's revised 567,330 to a seasonally adjusted annualized rate of 518,460 in June, according to information collected by CAR from more than 90 local Realtor associations and MLSs statewide.

June sales rose 8.5% from June 2011's revised 478,040 pace. The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the June pace throughout the year and is adjusted to account for seasonal factors that typically influence home sales.

Home prices continued to improve, with the median home price posting both month-over-month and year-over-year gains for the fourth consecutive month. The statewide median price of an existing, single-family detached home was $320,540 in June.

June's price rose 1.3% from a revised $316,410 in May and 8.1% from a revised $296,410 recorded in June 2011. The June 2012 figure was 30.7% higher than the cyclical bottom of $245,230 reached in February 2009. The median price has posted above the $300,000 level for the third straight month after remaining below that mark for 15 months.

California's housing inventory remained flat in June, with the Unsold Inventory Index for existing, single-family detached homes remaining at 3.5 months in June, consistent with the inventory level reported in May. June's housing inventory was down from a revised 5.1 months in June 2011.

The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A seven-month supply is considered normal.

"The lack of inventory continued to impact California's housing market this month," said CAR vice president and chief economist Leslie Appleton-Young. "Tight supply is putting upward pressure on home prices, but it also is restraining sales demand, especially in lower-price segments."

In June, sales below $300,000 declined 4.1% from the previous month, while sales of homes priced higher than $500,000 increased 2.3%.

Interest rates continued their downward trend in June, with 30-year fixed-mortgage interest rates averaging 3.68%, down from 3.80% in May and 4.51% in June 2011, according to Freddie Mac. Adjustable-mortgage interest rates averaged 2.76% in June, up from 2.74% in May but lower than the 3% average rate reported in June 2011.

Homes are moving faster on the market with the median number of days it takes to sell a single-family home dropping to 43.4 days in June, down from a revised 45.7 days in May and 50.4 days in June 2011.