Southern California home sales held at a three-year low last month amid a sluggish move-up market and record-low sales of newly built homes.
The median sale price fell year-over-year by the largest amount in 20 months as buyer uncertainty, tight credit and lackluster hiring continued to restrain housing demand, a real estate information service reported.
A total of 18,394 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in May.
That was up insignificantly – 0.3 percent – from 18,344 in April, and down 17.4 percent from 22,270 in May 2010, according to San Diego-based DataQuick. May marked the 11th consecutive month in which sales fell year-over-year.
On average, sales between April and May have increased 5.7 percent since 1988, when DataQuick’s statistics begin. May sales have varied from a low of 16,917 in 2008 to a high of 35,557 in 2005. Last month’s sales count was 29.0 percent below the May average of 25,902. May sales were lower than last month in just three of the past 23 years: 2008, 1995 and 1993.
The 1,152 newly built homes that sold across the Southland last month marked the lowest new-home total for the month of May since at least 1988.
“A year ago we were talking about sales reaching a four-year high as buyers rushed to take advantage of expiring federal homebuyer tax credits. Now sales are stuck at a three-year low. The government stimulus is long gone and some of the fundamental drivers of housing demand have yet to strengthen enough to lift sales to even average levels. Some of the key culprits are weak job growth, tight credit and a hesitancy among potential buyers and sellers, who question whether this is the best time to make their move,” said John Walsh, DataQuick president.
“So here we sit in the market doldrums,” he continued. “Two of the more likely sources of fresh wind in the market’s sails would be a pickup in hiring or further home price reductions.”
The median price paid for all new and resale Southland houses and condos purchased last month was $280,000, the same as in April but down 8.2 percent from $305,000 in May 2010. That year-over-year drop was the largest since the median fell 10.9 percent in September 2009.
The median has declined year-over-year for the past three months. It has been unchanged or lower than a year earlier each month since last December, when it posted a 0.3 percent annual increase.
Last month’s median was 13.4 percent higher than the median’s low point for the current real estate cycle – $247,000 in April 2009. The cycle’s peak median was $505,000 in mid 2007. The peak-to-trough drop was due to a decline in home values and a shift in sales toward low-cost homes, especially inland foreclosures.
Distressed property sales continued to account for more than half of the Southland resale market last month, with little change from April. Roughly one out of three homes resold was a foreclosure, while about one in five was a “short sale,” where the sale price fell short of what was owed on the property.
This article was republished with permission from The Street.