California home sales pick up steam

Los Angeles, California Photo: Dog97209

California's housing market continued to build momentum in March 2015, as sales and prices recorded back-to-back increases.

Sales in March were up 6.3 percent from a revised 368,400 in February and up 7.3 percent from a revised 365,120 in March 2014, according to the California Association of Realtors.

The year-over-year rise is the first back-to-back sales gain since December 2012 and the largest observed since May 2012.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 391,680 units in March. The statewide sales figure represents what would be the total number of homes sold during 2015 if sales maintained the March pace throughout the year.

C.A.R. President Chris Kutzkey attributes the building momentum to the improved economic conditions: "A better economy, improved job creation, and an increase in inventory in Central Valley and Southern California, in particular, are pushing sales higher, which led to the strongest February-to-March increase we’ve seen since 2008."

The median price of an existing, single-family detached California home jumped in March from both the previous month and year. The median home price was up 9.2 percent from $428,970 in February to $468,550 in March, the highest level in seven months. The increase was stronger than the long-run February-to-March average of 3.9 percent. March’s median price was 7.2 percent higher than the revised $437,100 recorded in March 2014.

With home sales growing at a faster rate than active listings in March, the available supply of existing, single-family detached homes for sale statewide declined, with the Unsold Inventory Index falling from the 5 months reported in February to 3.8 months in March. The index, which indicates the number of months needed to sell the supply of homes on the market at the current sales rate, stood at 4 months in March 2014. (A six- to seven-month supply is considered typical in a normal market.)

"While housing supply has been improving in real terms in recent months, the growth rate in housing demand continues to outpace that of inventory," adds C.A.R Vice President and Chief Economist Leslie Appleton-Young. This imbalance between supply and demand is continuing to drive up prices.