Outstanding June Sales nudge California Closer to Normalcy

The drought and raging wildfires appear not to be dampening the enthusiasm of people who wish to live in California.  CoreLogic reports that the state had the highest number of home sales in nine years in June and that sales jumped more from May to June than in any month in nearly three years.

Andrew LePage, writing in the CoreLogic Insights blog says home sales, both new and existing, totaled 46,095 in June, a 10.8 percent increase from May and up 16.8 percent from June 2014.  The last time June sales were higher was in June 2006 when 59,018 homes sold.  June 2015 bested sales in every month since September 2006 when 46,464 transactions closed.

In past years, CoreLogic's records go back to 1988, the May to June increase has averaged about 5 percent, roughly half the month-over-month gain this year.  Sales in the Golden State have now increased on an annual basis for four months after a period in which those sales declined in 11 of 12 months and the June 16.8 percent gain was the highest for any month since October 2012 when sales rose 22.3 percent year over year. The previous highest year-over-year gain in 2015 was 12.2 percent in March.

LePage said the California employment situation is one reason behind the big jump in sales.  Non-farm jobs rose 3 percent over the 12 months ended in June, resulting in nearly 462,000 new jobs. Low interest rates coupled with consumer sentiment that those rates won't last may also have spurred sales.  There were also more business days in June in which closings could take place and deeds be recorded than in May.

LePage cites June's sales as one indication of returning normalcy in the state.  While they remained nearly 10 percent below the long term average for June - 51,111 transactions - sales in June 2014 missed the average by 23 percent.  No month has surpassed its long term average in the state for over eight years.

He said the state's housing market also continued to edge toward normalcy in other ways last month. Absentee buyers - mainly investors and second-home buyers - purchased 20.8 percent of the homes sold in June, the lowest share since June 2010 and well below the peak absentee share of 32.5 percent in February 2013 and coming close to the long-term monthly average of about 18 percent.

Cash purchases were also the lowest, representing 22.4 percent of all sales in June, since November 2008, but still above the long-term monthly average of about 17 percent. The cash share peaked at 37.3 percent in February 2013. Distressed sales, the combination of real estate-owned (REO) sales and short sales, accounted for 7.2 percent of June sales, which is the lowest since July 2007, when it was 6.7 percent. The distressed sales share peaked at 67.5 percent in January 2009.