Mortgage rates moved down further last week before inching up again in the past couple days, as recent economic reports suggest that consumer inflation resumed its downward trend, while retail spending cooled more than expected, according to a report from the California Association of Realtors (CAR).
Fed Chair Jerome Powell also said recently, “I expect that inflation will move back down … on a monthly basis to levels that were more like the lower readings that we were having last year.”
Meanwhile, the median price of existing single-family homes in California is good news for sellers and less so for buyers, as the price reached a new all-time high of $904,210, an increase of 5.8% from March and a surge of 11.4% from the $811,510 in April 2023.
The strong year-over-year growth was the tenth straight month of annual statewide price increase and was the highest since March 2022. It was the first time in California history that the statewide median price exceeded $900,000.
“April’s rebound in both home sales and price shows the resilience of California’s housing market and is a signal that buyers and sellers are beginning to adjust to the higher interest rate environment,” said C.A.R. President Melanie Barker. “Market fundamentals are showing signs of improvement, and competition is on the rise again; homes are selling faster and nearly half the share of homes is selling above asking price — the highest in nine months.”
Reuters also noted that U.S. consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter, in a boost to financial market expectations for a September interest rate cut. The hope that the Federal Reserve will begin to ease rates this year was supported by other recent data which showed that retail sales were unexpectedly flat last month, said Reuters.
At the same time, the consumer price index rose 0.3% last month, after advancing 0.4% in March and February, according to the Labor Department’s Bureau of Labor Statistics.
CAR also posited that the new numbers “offer hope that the Central Bank could still lower rates in their upcoming July or September meeting.”
The California housing market, meanwhile, is still experiencing an encouraging start. April home sales at the state level improved moderately from last month and were up from the same month of last year, said CAR, while the statewide median price soared to the highest level on record.
Housing supply continued to improve, the report noted, with new active listings surging by double-digits from a year ago for the fourth consecutive month.
According to the CAR report, sales of existing single-family homes in California totaled 275,540 in April 2024, up 3.0% from 267,470 in March and 4.4% from 263,960 in April 2023.
The statewide pending sales, on the other hand, said CAR, fell below last year’s level by 4.0% as mortgage rates climbed steadily throughout the month of April. The dip in open-escrow sales last month suggests that closed sales in May will likely slow month-over-month and year-over-year. With rates cooling off since the start of this month, however, the report noted, more buyers could reenter the market in the coming weeks as the market moves further into the homebuying season.
As the CAR report added, “More new records will likely be set before the end of the summer though, as seasonal factors and tight inventory conditions will continue to put upward pressure on prices in the coming months.”
