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Sacramento home sales have hit a summer slump as potential buyers back away from escalating prices and rising mortgage interest rates.
New data shows that 4,300 homes sold in the region in June, a modest amount, but notably nearly 5 percent fewer than the number of sales in June last year, according to CoreLogic, a California real estate data firm.
Elsewhere in California, the June slump was steeper. Bay Area sales dropped 9 percent this June from last year at this time, and sales in Southern California were off 12 percent, according to CoreLogic data.
The number of homes on the market remained low but steady, suggesting the Sacramento region and California as a whole are seeing “buyer fatigue” after six years of nonstop price increases.
“Things have gotten a lot worse from the affordability standpoint,” CoreLogic analyst Andrew LePage said. “Some buyers don’t like what they are seeing and are just walking.
“One month doesn’t make a trend; so we’ll just have to see how things play out over the next few months.”
The June median home sales price in Sacramento County is $361,500, up slightly from May. That median price has been on the rise in Sacramento since January of 2012, when the median dipped to $153,000.
Fixed-rate 30-year mortgage rates also are on the rise, from less than 4 percent this time last year to more than 4.5 percent now.
CoreLogic’s LePage calculates that means a Sacramento home buyer will have to make monthly payments that are 17 percent higher this year for a median-priced home.
Johanna Prucha McCarthy, 33, a state worker and midtown Sacramento resident, is among many who would love to buy, but haven’t pulled the trigger. She describes herself as “a little obsessed” by the real estate market. She has a handful of apps on her smart phone that allow her to monitor the market. She has a real estate agent, money for a down payment, and has gone to countless open houses.
But after looking seriously for a central city house for more than a year, she’s become disillusioned as prices continue to rise and as more Bay Area residents buy Sacramento homes.
“I’ve backed off,” she said. “I’m not as hopeful as I was. I am trying to accept that being a renter is OK. Living in the neighborhood I like is a higher priority for me than buying a house.”
Economist Jordan Levine with the California Association of Realtors said some would-be buyers may fear that the price escalation is nearing a high point and are apprehensive about buying a house only to find home prices drop a few months later. Others, he said, simply may be priced out by the rising costs of both homes and mortgages.
“It suggests (some) buyers ... think there is going to be a correction, or they are unable to enter the market because of higher prices and higher interest rates,” Levine said.
Statewide, the median price of a home sale in June hit $603,000. That’s nearly $50,000 more than it was last year, according to data from the California Association of Realtors.
Fewer than 30 percent of Californians can afford the median price for an existing home in the state, state Realtor data shows. The picture is slightly less bleak in Sacramento, where 44 percent can afford the median.
Economist Levine said his group’s short-term analysis suggests home prices will continue to rise in the coming months, mainly because the economy in Sacramento and around the state remains solid, and because the number of homes available for sale remains low.
“There is a lot of demand for housing out there, even if we see flattening out of price growth,” Levine said.
Nationally, June represented the third straight month that home sales numbers declined.
Lawrence Yun, chief economist for the National Association of Realtors, said in a recent online presentation that he believes the lack of houses on the market creates competition that pushes up sales prices beyond the reach of more buyers.
“This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales,” Yun said in a statement on the NAR website.