The pace of sales of existing homes in California fell sharply in May on a year-to-year basis, led by a 22% sales decline in Orange County, the California Assn. of Realtors reported Thursday.
The decline was particularly sharp along coastal areas in Southern California, according to the real-estate sales trade group. Sales fell 16.3% in Ventura County and 11.6% in Los Angeles County, while dipping only 1.1% in San Diego County.
The drop in sales activity was accompanied by a slowing of appreciation in housing prices, which had been rising 2% to 3% in recent months. The median price of an existing single-family house in California rose only 0.6% to $201,930 in May from $200,784 in April.
In Orange County, the median price rose only 1.6% to $247,397, compared to $243,485 in April.
Still, that was up 24.3% from May, 1988, when the median price in Orange County was $199,019. Last year saw a booming market that began in the spring and sent sales and prices through the roof, making the county one of the most expensive markets for single-family homes in the nation.
The latest sales figures show that 536,158 existing houses closed escrow in May on an annualized basis, which reflects how many houses would be sold in California in 1989 if the pace in May continued all year long. The numbers are also adjusted for seasonal variations.
This year's pace was 9.5% below May, 1988, when 592,494 homes were sold on an annualized basis. The drop was the first since January, 1988, when annual sales fell 2.3%.
Real estate experts said the statistics confirm that rising mortgage rates have cooled the California housing market from its torrid pace of 1988, when the market was in a virtual buying frenzy. Although home-loan interest rates have dropped in recent weeks, the latest figures reflect house sales that closed escrow in May and were negotiated several weeks earlier when interest rates were still rising.
That rise in rates, coupled with continued price increases, hit sales particularly hard among first-time buyers in metropolitan areas along the coast, according to Leo Saunders, a real estate broker in Walnut Creek. Saunders is president of the Realtors association, which has about 125,000 members statewide.
"By the same token," Saunders said in a statement, "potential trade-up buyers--those who already own a home but were considering using their equity to move up in the market--were waiting on the sideline to see if rates would continue to rise. As a result, sales of higher-priced homes also declined during May."
At the same time, reflecting price affordability, condominium sales rose sharply in May, climbing at an annual rate of nearly 21%, the Realtors group said. The median sale price of an existing condominium in California is now $139,117, compared with $121,456 in May, 1988.
The California Assn. of Realtors predicts that about 800,000 homes will be sold in California this year, including 540,000 existing houses, 150,000 new houses and more than 100,000 new and used condominiums.
Although housing economists hope that recent drops in mortgage rates will boost sales activity, few are predicting a return to 1988's torrid levels. The market is being held back by consumer uncertainty about the economy and by high prices, which are continuing to drive first-time buyers from the market, said Joel Singer, CAR's chief economist.
Some of the median house prices in California today, compared with May, 1988, are:
- Los Angeles County, $217,708, up 25.9%.
- Orange County, $247,397, up $24.3%.
- San Diego County, $175,585, up 23.4%.
- Ventura County, $243,455, up 24.5%.
- Riverside and San Bernardino counties, $122,983, up 18.2%.
- San Francisco Bay Area, $267,634, up 36%.
% change in May prices Median from from Region Price Apr., '89 May, '88 Calif. (single family) $201,930 0.6 23.4 Calif. (condo) 139,117 1.9 14.5 Orange County 247,397 1.6 24.3 Central Valley 96,553 4.4 12.6 High Desert* 92,500 4.0 13.3 Los Angeles 217,708 0.9 25.9 Monterey 226,886 -5.3 27.2 N. California 79,038 0.5 7.5 Wine Country 150,333 N/A 16.8 Palm Springs/ Lower Desert* 113,103 -9.9 6.9 Riverside/ San Bernardino 122,983 3.2 18.2 Sacramento 106,270 3.1 12.7 San Diego 175,585 -0.3 23.4 San Francisco Bay 267,634 2.3 36.0 Santa Barbara* 229,999 7.3 10.7 Ventura 243,455 -2.6 24.5
% change in May sales activity from from Region Apr., '89 May, '88 Calif. (single family) -2.2 -9.5 Calif. (condo) 16.4 20.6 Orange County 1.0 -22.6 Central Valley 23.4 8.8 High Desert* 8.1 14.3 Los Angeles 4.6 -11.6 Monterey -4.6 -9.7 N. California 17.4 10.7 Wine Country N/A -44.6 Palm Springs/ Lower Desert* 26.4 16.4 Riverside/ San Bernardino 16.0 -7.9 Sacramento 33.0 6.6 San Diego 20.8 -1.1 San Francisco Bay 5.0 -2.1 Santa Barbara* -12.6 -13.0 Ventura 3.0 -16.3
* Due to the small size of the sample, price and activity changes may be overemphasized.
Source: California Assn. of Realtors
Times staff writer Michael Flagg contributed to this report.