More Californians may be getting involved in a home purchase, which could have a significant effect on the local market, though more work may need to be done.
During March, home sales in the Golden State rose to a rate of 367,000 units, according to a report from the California Association of Realtors. This was 1.4 percent higher than the 361,790 units sold in February.
Despite the monthly gain, there were still some issues with the state's housing market. The latest measurement was 12.3 percent lower than in March of last year, when 418,310 units were sold. It also was the fifth month in a row where sales did not eclipse a rate of 400,000 units, as well as the eighth month running where sales dropped compared to 12 months earlier.
"While the demand for housing was up from February, the market is taking a hit from lower housing affordability compared to a year ago, which led to a decline in home sales from last year," said Kevin Brown, president of CAR. "Moreover, concerns over tighter lending standards and increased borrowing costs are also contributing factors to the sluggish market, as they both negatively impact the bottom line of home buyers who obtain financing through mortgages."
Home prices did pick up during the month, as the median home price for single-family properties was $435,470 in March, the report showed. This was 7.7 percent higher than February's level of $404,250, as well as nearly 15 percent improved from the same point in 2013, as that level was $379,000.
Mortgage rates drop in May
One aspect of the market that may encourage some individuals to get involved with a home purchase in California is the recent decline in interest rates. According to a report from Freddie Mac, the 30-year fixed-rate mortgage posted an average of 4.14 percent during the week ending May 22, lower than the previous week's level of 4.2 percent.
"Mortgage rates continued to decline this week as industrial production slipped by 0.6 percent in April, below the market consensus forecast," said Frank Nothaft, vice president and chief economist at Freddie Mac. "Meanwhile, housing starts jumped 13 percent in April to a seasonally adjusted annual rate of 1,072,000 units, well above expectations. Permits rose to a seasonally adjusted annual rate of 1,080,000 in April, also above expectations."
The 15-year FRM also fell, as it had a figure of 3.25 percent in the latest measurement, down from the previous level of 3.29 percent, the report added.