California counterintuitive: Less frenzy, more home sales

End to red-hot summer run of price hikes, according to California Association of Realtors

California median home price down, sales up in September, according to CAR report (iStock)
California median home price down, sales up in September, according to CAR report (iStock)

Call it California counterintuitive: Less of a frenzy in the marketplace has translated to more sales of single-family homes statewide.

That’s a key takeaway from the California Association of Realtors report on September sales, which showed a 6 percent hike in transactions from August –– the biggest month-to-month increase in more than a year.

September’s reversal of a downward trend on sales –– ongoing since spring –– came as both prices and demand cooled in the wake of a frenzied summer. Strong demand spurred by low-interest rates and pandemic-driven relocations had pushed prices up relentlessly for most of the year, dragging down availability and affordability to deliver a twin damper on sales.

Last month’s 6 percent statewide gain represented an annualized pace of 438,000 home sales closed in the state, CAR calculated, up from 415,000 in August.

The state’s median home price for September was $809,000, 2 percent lower than for August and 14 percent higher compared with a year earlier.

The slight dip last month was enough to bring some prospective buyers back off the sidelines, Dave Walsh, president of the CAR, said in a release.

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“As we move into the off-homebuying season we should see market competition and home prices moderating, giving those who waited out the highly competitive market earlier this year an opportunity to revisit buying,” Walsh said.

California’s downward trend in home sales began in May, when CAR counted an annualized rate of 446,000 closings, a 3 percent month-to-month dip. The trend continued for the rest of the summer, largely because so many successive months of intense demand had exhausted the market’s available homes.

“It’s not that demand is cooling,” appraiser Jonathan Miller said in August. “It’s that sales inventory is collapsing.”

Even with last month’s rise, statewide sales are down nearly 11 percent compared with a year ago, highlighting the intensity of the prior buying frenzy.

The statewide cooling trend isn’t hitting local markets evenly. The median price continued to climb in Los Angeles County, from $830,000 in August to $886,000 last month, according to the report. September’s median marks a 13 percent increase from the same month in 2020, when L.A. County’s median sale price was $766,000.

Earlier this month, a separate CAR report forecast a statewide cooling trend for 2022, predicting that nearly 417,000 existing single-family homes would sell next year and that the state’s median sale price would see only a moderate rise. CAR expects that the state’s median sale price will finish this year with a jump of 20 percent.

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