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July’s Southland Home Prices Stay Same As June’s, But Sales Soar
Southern California home prices remained flat in July from a month earlier as more houses went on sale and interest rates rose.
The median sales price in the six-county region was $385,000 last month, unchanged from June, DataQuick said Wednesday. Still, the median is 25.8% higher than July 2012.
While the price increases took a slight breather over the month, sales soared. Buyers purchased 25,419 new and resale houses and condos in July, 23.5% more than a year earlier and the strongest July since 2005. Sales were up 17.6% from June, when sales fell.
“July home sales came in very strong, and we think a lot of the increase in activity can be chalked up to a rising inventory of homes for sale,” DataQuick President John Walsh said in a statement. “The jump in mortgage rates a couple of months back might have spurred more buying, too.”
Homes prices have risen quickly this year amid historically low mortgage rates, an improving economy, tight inventory and heavy investor demand. The recent dramatic gains have raised questions how long the torrid pace can continue.
Many economists say the increases should moderate as the inventory crunch driving much of the gains loosens through new construction and as more owners become enticed to put their homes on the market. Rising mortgage rates should further cool the market as housing becomes more expensive, they say.
July’s median price figures cover sales that closed in July, meaning most deals opened escrow that month or in June, DataQuick says.
Mortgage rates have risen about one percentage point since the beginning of May and inventory has expanded as well. Inventory increased in all six counties last month from June, and was higher than last year in all but Orange and San Diego counties, according to Realtor.com.
Those changes could be having an impact. In June, the median home price posted a record 28% year-over-year gain and increased 4.6% from May.
“The market continues its rebalancing act, with more and more people who’ve been ‘underwater’ now able to sell their homes at a profit, or at least break even,” Walsh said. “As the mismatch between supply and demand eases, it will be more difficult for home prices to rise as steeply as we’ve seen over the past year.”
This year’s sharp price rebounds have brought both pain and gain.
For those who bought near the peak of the market and still own their homes, the rising price wave has carried relief as they rebuild equity. It has also spurred builders to ramp up production, providing a boost to the broader economy.
But for first time home buyers — who often must compete with savvy, cash-carrying investors — the increases have hurt as affordability worsens.
The median sales price is the point at which half the homes sold for more and half sold for less. That means it is influenced not only by rising values, but also the mix of homes selling at any given point.
DataQuick said that most of last month’s double-digit yearly increase could be explained by actual rising prices, while around one-fifth was attributed to a change in mix.
Buyers in Los Angeles, Ventura, Orange, San Diego, San Bernardino and Riverside counties purchased significantly more homes priced $500,000 or higher in July than a year earlier, while sales of homes below $300,000 fell.