Low Inventory, Pent-Up Demand Drive Prices Higher in California’s Housing Market

In the month of June, California’s housing market experienced the largest month-to-month sales increase in almost 40 years, and the state’s median home price hit a record high, according to the California Association of Realtors.

June sales of existing single-family homes totaled 339,910 on a seasonally adjusted annualized rate, an increase of 42.4 percent from May.

“Home sales bounced back solidly in June after hitting a record bottom in May, as lockdown restrictions loosened and pent up demand driven by record-low interest rates roared back,” said C.A.R. President Jeanne Radsick in a press release posted to the organization’s website.

Homes priced below $500,000 comprised 48 percent of total sales in May, but only 44 percent of sales in June. Sales of million-dollar residences increased to 18.1 percent in June, as compared to 15.6 percent in the previous month.

According to C.A.R., the statewide median home price dropped below $600,000 in May, but rose to $626,170 the following month—up 2.5 percent from June 2019. It’s the highest May-to-June average on record.

Pent-up demand due to a delayed home-buying season caused median home prices in the Central Valley to rise 7.4 percent from 2019. In Southern California home prices saw a 3.3 percent increase from the previous year.

Further increasing pent-up demand, housing inventory continued to trend downward year-over-year, per C.A.R. Active listings declined by 43 percent.

C.A.R. reported that statewide all jurisdictions experienced a decline in housing inventory by over 30 percent from the previous year. Southern California, which had the largest drop in supply, saw for-sale listings plunge 47.3 percent year over year.

In a Google poll conducted by C.A.R. in early July, 44 percent of consumers felt it was a good time to sell a home, which is an increase from 40 percent last month. Thirty-one percent of consumers said it was a good time to purchase—up 8 percent from last year.

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