Home sales can be a good indicator of the health of the state’s economy and housing markets. Home sales have been relatively weak for over a year. In September, there were an estimated 25,800 non-distressed (not resulting from mortgage delinquency or foreclosure) home sales statewide. This is below the 26,100 sales in September 2018 and the long-term historical average of 31,500 sales per month. (This data is “seasonally-adjusted” because some months are predictably higher or lower than others.)
Home sales were on a clear downward trend during the second half of 2018 and the beginning of 2019. Sales seem to have stabilized in recent months and are no longer declining from month to month. Before stabilizing, sales never reached the level of decline that would have, historically, signaled a broader economic downturn was on the horizon. Nonetheless, should sales remain at their current low levels for a protracted period, it would be a warning sign that economic conditions are weakening.
Date sources: Zillow, California Association of Realtors, and Moody’s Analytics, with LAO calculations.