Southern California home sales declined for the eighth consecutive month and hit the slowest pace in nine years, while the rate of home-price appreciation fell to the lowest level since fall 1999, according to DataQuick Information Systems, a real estate information company.
A total of 22,712 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July, DataQuick reported, down 22.3 percent from 29,237 sales in June and down 26.9 percent from 31,069 sales in July last year.
Last month’s sales total marked the lowest for a July since 1997, when 22,302 homes sold, and fell below the July average of 24,669, which dates back to 1988. The strongest July was in 2003, when 33,561 homes sold, while the weakest was in 1995, with 15,077 sales, according to DataQuick statistics.
Sales generally decline from June to July, DataQuick noted, though last month’s 22.3 percent drop was the biggest since the company began tracking the market in 1988. The 26.9 percent year-over-year decline in last month’s sales compared with July 2005 was the sharpest year-over-year drop since August 1992, when sales declined 29.9 percent.
“The relatively large drop in sales last month may be nothing more than a statistical blip, but it could also be a sign of fast-petering demand for homes at today’s prices,” said Marshall Prentice, DataQuick president, in a statement.
“Our sense has been that many who bought homes in recent years purchased them sooner than they otherwise would have because of very low interest rates and a great sense of urgency, given the fear of being priced out forever or missing out on a great investment. That phenomenon helps explain why there’s not more demand today. Whether July’s data also signals something more ominous at work in the market — something that would cause a severe correction in home values — is unclear to us. We’ll know a lot more in a few months.”
The median price paid for a Southern California home was $492,000 in July. That was down 0.2 percent from June’s record of $493,000, but up 4.9 percent from $469,000 in July last year. Last month’s 4.9 percent annual increase in the Southern California median price was the smallest gain since October 1999, when the $191,000 median rose 3.8 percent.
The typical monthly mortgage payment that Southern California buyers committed themselves to paying was $2,437 last month, the same as the previous month, but up from $2,052 a year ago. Adjusted for inflation, current payments are about 6.2 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle, DataQuick reported.
“Indicators of market distress are still largely absent. Financing with adjustable-rate mortgages has trended lower over the past year. Foreclosure activity is rising but is still low in a historical context. Down-payment sizes are stable, as are flipping rates and non-owner-occupied buying activity,” according to the announcement.