Sellers Refuse to Accept Reality

Tuesday, September 26, 2006 Inman News

Home sales were down 30.1 percent in August compared to the same month last year, the California Association of Realtors trade group reported today, while the median existing-home price rose 1.6 percent to $576,360.

"We experienced the greatest year-to-year sales decline last month since August 1982, when sales fell 30.4 percent," said Vince Malta, C.A.R. president, in a statement. "This is another indication that we're in the initial stages of a long-anticipated adjustment in the market.
Some home sellers, he said, " are still clinging to price expectations that are no longer valid in today's market."

Closed escrow sales of existing single-family detached homes in California totaled 442,150 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from about 90 local Realtor associations statewide.

The statewide sales figure represents what the total number of homes sold during 2006 would be if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales, the association reported.
The August 2006 median price increased 1.7 percent compared with July's revised $566,940 median price.

"Although the median price in the state and in several regions hit an all-time record in August, we expect softer prices toward the end of the year," stated Leslie Appleton-Young, C.A.R.'s vice president and chief economist.

"The median price typically peaks somewhere between June and August before declining toward the end of the year. Some areas of the state already have experienced year-to-year declines for more than two months. This is in stark contrast to the past several years when there were constant double-digit increases."

She also noted that 29 percent of homes are on the market for 30 days or less, compared with 51 percent a year ago, and the share of homes on the market for 90 days or longer has nearly quadrupled from 6 percent in August 2004 to 22 percent last month.

C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in August 2006 was 6.8 months, compared with 2.6 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.