The lowest interest rates in more than a year boosted California’s housing market and kept home sales level in March after an exceptionally strong performance the previous month, according to the California Association of Realtors. Realtors speculate the low mortgage rates and easing of home prices will bring buyers back to the market.
The lower rates “gave would-be buyers the confidence to enter the housing market and provided a much-needed push to jump-start the spring home buying season,” said Jared Martin, president of the state Realtor group. “Pending sales also showed healthy improvement in March, which suggests a brighter market outlook could be in place in the second quarter.”
The statewide March sales figure of 397,210 was down 0.2 percent from the revised 398,040 level in February. March sales were down 6.3 percent from 423,990 units in March 2018.
Meanwhile, after hitting the lowest level in 12 months in February, the statewide median home price bounced back and rose 5.9 percent to $565,880 in March, up from $534,140 in February and up 0.2 percent from a revised $564,820 in March 2018.
“The median price has been softening since it reached a peak last summer, and March’s year-over-year price increase was the smallest in seven years,” said C.A.R. senior vice president and chief economist Leslie Appleton-Young. “The flattening home prices, coupled with low mortgage rates, bode well for housing affordability and may bring more buyers who may have given up back to the market.”
The 30-year, fixed-mortgage interest rate averaged 4.27 percent in March, down from 4.44 percent in March 2018, according to Freddie Mac. The five-year, adjustable mortgage interest rate also declined in March to an average of 3.83 percent from 3.65 in March 2018
Sales in the San Francisco Bay Area were down 10.8 percent from March 2018, but month-over-month home sales in the region rose 46.1 percent. On a year-over-year basis, the Bay Area median price of $940,000 in March dipped 4.1 percent from March 2018, and but was up 8.4 percent from February 2019.
“Lower interest rates have certainly brought back activity to the housing market. Home prices have softened compared to last year and with an increase in inventory, we are seeing more buyers previously on the sidelines now seriously taking an interest in homes that are available on the Peninsula and in the South Bay,” said Alan Barbic, president of the Silicon Valley Association of Realtors.
In Santa Clara County, March home sales were down 11.2 percent from the same month a year ago, but sales were up 57.9 percent from February. The median sales price of a Santa Clara County home in March was $1,300,000, 10.6 percent below the March 2018 median of $1,454,500 and 11.1 percent higher than the February 2019 median of $1,170,000.
San Mateo County experienced a similar trend, with March home sales down 10.9 percent from March 2018 but up 46 percent from the previous month. The March median price of a San Mateo County home was $1,610,000, down 0.3 percent from the median of $1,615,000 last year and up 13 percent from February ($1,425,000).
According to MLSListings, March inventory in Santa Clara County was up six percent from February, and up 87 percent from March last year, with 1,276 homes available (682 last year). In San Mateo County, inventory was up two percent from February and 42 percent from March 2018, with 462 homes available (325 last year).
“While low interest rates help affordability, the real solution to Silicon Valley’s housing challenges would be increasing the housing supply,” said Barbic.
Rose Meily is the public affairs and communications director for Silicon Valley Association of REALTORS in Cupertino (www.silvar.org). Contact her at rmeily@silvar.org.
