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Home sales can be a good indicator of the health of the state’s economy and housing markets. Home sales began to slow in the summer of 2018 and declined consistently through the rest of 2018. There were 26,100 non-distressed (not resulting from mortgage delinquency or foreclosure) home sales statewide in December. This compares to 30,100 in December 2017. (This data is “seasonally-adjusted” because some months are predictably higher or lower than others.)

Recent declines in home sales are somewhat worrying. Home sales in October through December of this year fell 12 percent below those same three months in 2017. That being said, the recent declines are not yet a clear sign that broader economic conditions will slow in the coming months. As can be seen on the graph below, home sales typically experience declines of 25 percent or more leading into a recession. The graph also shows that the state experienced declines similar to those seen in recent months in both 2010 and 2014, but home sales rebounded in the following months.

Date sources: Zillow, California Association of Realtors, and Moody’s Analytics, with LAO calculations.


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