Southern California home sales rose in October as prices showed more signs of firming. The median sale price fell by the smallest amount in two years, the result of a shrinking inventory of homes for sale and government and industry efforts to stoke demand and curtail foreclosures, a real estate information service reported.
Two counties – Orange and San Diego – posted modest year-over-year increases in their overall median sale price last month. It was the second consecutive gain for Orange County and the first in more than three years for San Diego. Both counties also posted small annual gains the past two months in their median price paid for resale single-family detached houses.
Last month 22,132 new and resale houses and condos closed escrow in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up 2.8 percent from 21,539 in September and also up 2.8 percent from 21,532 a year earlier, according to MDA DataQuick of San Diego.
October marked the 16th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases. The 2.8 percent uptick in October sales from September wasn’t unusual, given sales have increased between those two months in half of the years – including 2007 and 2008. The average change between September and October is a decline of just under 1 percent.
Sales increases over the last two months can be partially attributed to the recent increase in short sales, which take longer to close escrow. The result is that some summer deals that might normally have closed earlier instead closed in September and October.
Other factors driving home sales higher of late: A rush by some to take advantage of the federal tax credit for first-time buyers, which was initially set to expire at the end of this month but was recently extended and expanded. Also, mortgage rates remain extremely attractive and, combined with home price declines, have boosted housing affordability.
A critical financing source for first-time buyers purchasing lower-cost homes, especially foreclosures, has been the federally-insured FHA loan. FHA mortgages accounted for 38.3 percent of all Southland purchase loans last month, compared with 32.5 percent a year ago and just 2 percent two years ago. FHA’s share of purchase loans varied last month from 26.2 percent in Orange County to 49.2 percent in Riverside County. They offer down payments as low as 3.5 percent and relatively lenient qualifying standards.