Painting by Santa Barbara artist Chris Potter
The California real estate market has retreated for the third straight month as existing single family home sales totaled 406,920 in July of 2018. The statewide median home price was $591,460 down 1.9% from June and up 7.6% from July of 2017. "In the midst of the peak home buying season, high home prices and rising interest rates combined to crimp housing affordability, which in turn is subduing home sales," saId CAR President Steve White. " Some of the reluctance by buyers appears to be driven by fears that the market may be peaking.
Additionally, the lack of a federal tax incentive for home ownership could be at play given that much of the weakness is in the lower priced first time buyers segment of the market." The Southern California region housing market was essentially flat compared to last year with sales ticking up 0.1 percent. The 30 year fixed mortgage interest rates averaged 4.53 percent in July down from 4.57 percent in June and up from 3.97 percent from July of 2017.
"While home sales continued to decline in recent months, the softening of the market is more indicative of a market shift rather than a major market correction," says CAR's Senior Vice President and Chief Economist Leslie Appleton-Young. "Despite the slowdown, there were some silver linings in the market in July. For example, home prices between $500,000 and $1,000,000 posted modest gains of about 5 percent in July thanks to growing inventory. Additionally, every price segment above $1,000,000 continued to enjoy double digit sales gain."
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