2014 Brings Calm to California’s Housing Market

California's housing market made more small strides toward stability over the last 12 months, though sales activity took a dip compared to the year before.

According to information collected from Realtor associations and multiple listing services statewide, existing-home sales in December totaled a seasonally adjusted annual rate of 366,000 units, down 2.9 percent from a revised rate of 376,890 in November, the California Association of Realtors (C.A.R.) reported Thursday.

Compared to a year ago, December sales were up 0.6 percent—a minor improvement, but the first annual increase since July 2013.

For the entire year, C.A.R. estimates that 383,320 single-family homes closed escrow across the state, a 7.6 percent decline from 2013.

"Home sales were down on a statewide basis, with pockets of gains in sales activity, especially in Southern California and the Central Valley, where home sales were higher than the prior month and year," said 2015 C.A.R. President Chris Kutzkey. "Not so for the San Francisco Bay Area, which saw run-ups in sales and prices throughout the year. This market has tempered from its earlier frenzied pace mostly due to extremely tight inventory."

The supply of for-sale homes on the market remained tight in December, shrinking to a 3.3-month supply at the current sales rate. A six- to seven-month supply is considered typical for a normal housing market.

Meanwhile, the median price of an existing single-family house in the Golden State ticked up 1.7 percent month-over-month and 3.1 percent year-over-year, gaining to $452,570. The increase marked a reversal from a three-month declining trend.

Though price gains in the state have continued on a yearly basis uninterrupted for more than two years, those increases have narrowed to a more sustainable pace—a sign that C.A.R. VP and Chief Economist Leslie Appleton-Young took as a good sign.

"Home prices have stabilized over the past year, which is positive news for buyers who have been putting off their home search until prices leveled off," Appleton-Young said. "And with recent news of an improvement in the job market and the lowest interest rates in a year and a half, buyers may be resuming their home search."

With competition over the state's remaining housing stock fizzling, C.A.R. reported that homes sold at 97 percent of their list price in December, down from a ratio of 98.1 percent at the end of 2013. The Bay Area was an exception, with homes there pulling in about 0.6 percent more than their asking price.