The housing market saw strong gains in March—particularly in California. According to a recent report from the California Association of Realtors (CAR), both existing home sales and median price rose in March, gaining ground over February and over the year. Every major region in the state also saw similar gains.
If the March pace is kept up, CAR predicted California will see more than 416,000 single-family homes sold over the course of 2017. That estimate is up 4 percent from February (400,720) and 6.9 percent from March of last year (389,770.) The uptick can be attributed to rising interest rates—and the expectation that they will continue to rise as the year goes on, according to CAR President Geoff McIntosh.
"March's solid sales performance was likely influenced by the specter of higher interest rates, which may have pushed buyers off the sidelines and close escrow before rates moved higher," McIntosh said. "The strong housing demand, coupled with a shortage of available homes for sale, is pushing prices higher as would-be buyers try to purchase before affordability gets worse."
Home prices also rose for the month, jumping to a median price of $517,020—an eight percent increase from February and nearly seven percent from March 2016. Tight inventory and ever-rising demand are to blame, according to Leslie Appleton-Young, Senior Vice President and Chief Economist for CAR. The state’s number of active listings fell 12 percent over last year.
"The spring homebuying season is off to a good start, as the economic and market fundamentals remain solid for the most part," Appleton-Young said. "However, higher interest rates, a dearth of housing inventory, and slow wage growth will continue to have an adverse effect on housing affordability that is putting upward pressure on home prices, and is sure to hamper the market throughout the year."
March saw CAR’s Unsold Inventory Index dropped a full month over February—decreasing from four months to three months—hitting its third-lowest level in more than three years. This strapped inventory also caused a quickening of days-on-market. It took just 26.7 days to sell a single-family home in March, shaving nearly seven days off the process over February and 3 days off from March of last year.
Read the full report at CAR.org.