The coronavirus lockdown devastated home sales in California in May, causing transactions to drop 41.4% from the previous year, the California Association of Realtors reported on Tuesday, June 16.
This is the largest year-over-year decline since November 2007.
Median house prices, meanwhile, have also fallen from levels a year ago, the first such decline in eight years.
The trend reflects real estate deals closed at the height of the foreclosure in March and April, when open houses moved online and buyers and sellers pulled out of the market. However, market data reflecting more recently opened escrows shows that a rebound is underway.
“The sharp drop in sales in May was the biggest we’ve seen in some time, but there are encouraging signs that the market is recovering and should continue to improve over the next few months,” said CAR President Jeanne Radsick Bakersfield.
The numbers reflect closed sales of existing single-family homes, which account for more than two-thirds of all residential transactions.
CAR said 238,740 homes would sell for a full year at the pace of May sales. This was the slowest statewide sales pace since the onset of the Great Recession 13 years ago. The last full year with sales as slow as in May was 1982, a year of recession where interest rates averaged 16% (up from 3.2% last week). May sales were also down 13.9% from April.
All but one of the 51 California counties tracked by CAR saw year-over-year sales decline last month, according to the report, and all areas of the state saw sales drop by at minus 35%.
“As we expected, home sales in May were fully impacted by the coronavirus pandemic, as much of the state has been stranded in recent months and caused three straight months of declining prices. double-digit sales, ”said CAR chief economist Leslie Appleton-Young. in a report.
Meanwhile, the statewide median home price fell for the first time since February 2012, falling 3.7% to $ 588,070.
Statewide, escrow deposits were down 6% as of June 6, according to Zillow – indicating that sales closed in June and July will likely see a much smaller drop than in May.
The “perception gap” of buyers is also showing signs of improvement, according to a survey of CAR agents. Agents said 77% of buyers expected prices to drop in late May, down from 90% a month earlier. Twenty-nine percent said sellers were cutting prices at the end of May, down from 33% a month earlier.
“While we expect sales activity to remain below pre-COVID-19 levels,” said Appleton-Young, “closed sales are expected to improve markedly as the gradual reopening of the economy continues and consumers feel more confident to return to the market.