Driven by record low mortgage interest rates, sales of existing homes in California jumped more than 8% in July, the biggest gain since December, the California Assn. of Realtors said Wednesday.
For the first time this year, the state recorded increased sales compared to both the previous month and the same period a year earlier, giving some analysts hope that the state's real estate recession is nearing an end as mortgage rates dipped near 7% for 30-year loans.
On a month-to-month basis, the 8.2% gain in California outpaced the 5.4% increase reported nationwide by the National Assn. of Realtors. In a July-to-July comparison, the 14.8% growth nationally outstripped an 8.7% increase in California sales.
By either measure, however, the data may be evidence that the California real estate industry is pulling out of its recession, said John Karevoll, real estate analyst for Dataquick Information Systems in La Jolla.
"The main factor is that I think people now perceive that the bottom of the market seems to have passed," he said. Karevoll forecasts continued gains in August and September.
Another economic report released Wednesday left a mixed picture, however. The Commerce Department said orders of durable goods fell 3.8% nationally, indicating that business and consumer confidence remain weak.
The drop in orders for durable goods mostly reflected a decline in orders of aircraft, aircraft parts, automobiles and auto parts, according to Steve Andrews, a Commerce Department branch chief.
Falling orders--along with declines in backlogged orders for 24 of the last 29 months--mean that manufactures have little need to do much hiring, he said.
In the home-buying market, however, historically low rates for mortgages seem to be winning out over depressed consumer confidence.
"We're basically talking here about an interest-rate driven market," said John Tuccillo, chief economist for the National Assn. of Realtors.
Lower prices--the median price of a California home was down 4.7% in July from a year earlier--and an excellent inventory also may be helping motivate California home buyers, said Walt McDonald, president of the California Assn. of Realtors.
Still, home sales in Los Angeles County continued to decline in July, falling 1% compared to June and 4.7% compared to July, 1992, a less severe decline than in recent months.
Orange County joined in the statewide gains, however, with July sales up 14.4% from the previous month and 21.4% from a year earlier.
In Ventura County, sales were down 2.2% from June levels but up 8.2% compared to July, 1992.
New home sales--which will be reported by the Commerce Department on Monday--are watched even more closely than existing home sales. And while the latest real estate news appears encouraging, California has a long way to go, analysts said.
"We're by no means out of the woods in terms of the economic factors that led to the slowdown," Karevoll said.