Home sales can be a good indicator of the health of the state’s economy and housing markets. Home sales have been relatively weak in recent months. There were an estimated 26,300 non-distressed (not resulting from mortgage delinquency or foreclosure) home sales statewide in April. This is below the 29,500 sales in April 2018 and the long-term historical average of 31,400 sales per month. (This data is “seasonally-adjusted” because some months are predictably higher or lower than others.)
Home sales have been on a clear downward trend since summer of 2018. However, after several months of growing severity in year-over-year declines, the rate of decline seems to have stabilized at 10% to 12% in recent months. This level of decline is below the level typically seen before a recession (declines of 25 percent or more). As we discussed in our recent May Economic Outlook, housing markets appear to be stabilizing after showing weakness following a series of interest rate increases in 2017 and 2018. Should interest rates level off in 2019, as many economists anticipate, it would make it more likely that home sales avoid additional declines in the coming months.
Date sources: Zillow, California Association of Realtors, and Moody’s Analytics, with LAO calculations.