California new-home sales tumble 45% in August

California new-home sales dropped 44.7 percent in August compared to the same month last year and the median new-home price dropped 7.6 percent statewide, the California Building Industry Association reported this week.

In Southern California, sales of new and previously owned homes dropped 48.5 percent and the median price dropped 4 percent in September compared to September 2006, according to a separate report by real estate research company DataQuick Information Systems.

And sales of new and resale homes in the San Francisco Bay Area dropped 40.1 percent from September 2006 to September 2007, while the median price climbed 0.8 percent, DataQuick reported.

The Riverside metro area had the largest number of new-home sales in August 2007, at 854, the California Building Industry Association reported. But the sales total was 50 percent lower than in August 2006.

Among other markets with more than 100 sales in August 2007, sales dropped 54.2 percent in the Los Angeles metro area, 53.8 percent in the San Diego area, 53.5 percent in the Oakland area, 47.2 percent in the Anaheim area, 38.5 percent in the San Jose area, 16.9 percent in the Fresno area, and 5 percent in the Sacramento area compared to August 2006.

And for those markets with more than 100 sales in August 2007, the median price of new homes rose 24.8 percent in August 2007 and 5.3 percent in the San Diego area while falling 16.1 percent in the Sacramento area, 11.3 percent in the Hanford-Corcoran area, 7.9 percent in the Riverside area, 5.8 percent in the Los Angeles area, 1.5 percent in the San Jose area, 1.4 percent in the Visalia-Porterville area and 0.3 percent in the Oakland area compared to August 2006.

The CBIA/Hanley Wood Market Intelligence report on new-home sales and prices also noted that single-family new-home sales dropped 43.4 percent and the median price dropped 10.8 percent in August compared to the same month last year. That compares to a 54.7 percent drop in new condo sales and a 2.9 percent rise in the median price of new condos. Sales of new town houses and plexes fell 24.6 percent while the median price rose 1.1 percent.

For all housing types, there were 3,420 home sales reported in August, down from 6,181 sales in August 2006.

“The credit crunch couldn’t have come at a worse time,” said Jonathan Dienhart, director of published research for Hanley Wood, in a statement. “Just when we had started to see signs of stability in some markets, the difficulty in gaining access to credit has made purchasing a new home unattainable for many prospective buyers.”

He added, “Many prospective home buyers have taken themselves out of the market because it seems too risky, or because they don’t feel they can sell their existing home, or because they do not believe they can qualify for an affordable mortgage.”

Robert Rivinius, CBIA president and CEO, said in a statement that Congress should take action to pass legislation that would allow government-sponsored mortgage enterprises Fannie Mae and Freddie Mac “to purchase mortgages in high-cost areas such as California,” and to change tax laws “to ensure borrowers who have portions of their loans forgiven by lenders aren’t penalized by the (Internal Revenue Service).”

Meanwhile, DataQuick reported that regional home sales in the San Francisco Bay Area and Southern California sank to their lowest levels in more than 20 years in September, and blamed the slump on buyers’ difficulty in obtaining financing, among other factors.

September 2007 was the slowest September for California home sales on record for DataQuick, which has tracked sales data since 1988, and it was also the slowest of all months on record for Southern California home sales. Bay Area home sales have dropped on a year-over-year basis for the past 32 months, DataQuick also reported.

“A lot of escrows just didn’t close in September because the buyers couldn’t get financing. Some of those sales might close this month or next, but many of the deals are going to be put on hold or die on the vine,” said Marshall Prentice, DataQuick president, in a statement. “Jumbo financing has become more available the last few weeks, but lenders are being more cautious than before, and the loans cost more.”

Jumbo loans are loans that exceed the conforming loan limit, a standard that is used to determine the maximum size of mortgages eligible for purchase by Fannie Mae and Freddie Mac and is also used to set limits for Federal Housing Administration and Veterans Administration loans.

The conforming loan limit stands at $417,000, though a House-approved bill, HR 1427, would allow Fannie and Freddie to securitize loans up to $625,000 in areas where the median home price exceeds the limit.

The California Association of Realtors trade group reported that the median price of a single-family resale home was $588,970 in August.

DataQuick reported this week that the median price for a San Francisco Bay Area home was $625,000 in September, compared to $620,000 in September 2006. And the median price for a Southern California home was $462,000 in September, compared to $481,000 in September 2006.

Source: DataQuick Information Systems, based on data for new and resale homes.