California home sales drop 24% in January
Decline reflects rising mortgage interest rates and weakening consumer confidence.
February 28, 2006: 7:26 PM EST
SAN FRANCISCO (Reuters) - California's housing market is slowing as analysts had predicted, underscored by a slump in home sales in January, according to the California Association of Realtors.
Sales of existing, single-family detached homes in California totaled 500,470 at a seasonally adjusted annualized rate in January, down 24.1 percent from a year earlier and 5.9 percent from December, according to the report from the association.
The declines reflect a weakening in consumer confidence, and a rise in mortgage interest rates which have sidelined nervous home buyers, the association said.
"We have now seen three months in a row where sales have dropped more than expected," said Robert Kleinhenz, an economist with the association. "At least some home buyers have adopted a wait-and-see attitude."
Declining sales had been expected. January is a slow month for sales and financing for home purchases is becoming more challenging with interest rates on the upswing and home prices holding at lofty levels.
"Mortgage brokers are not as busy, real estate brokers are not as busy," said Kevin Clay of Reign Companies, a San Carlos, California-based real estate and financial services firm. "There seems to be a decrease in activity overall."
The inventory of homes for sale could swell as new homes nearing completion come on the market, and as home owners who believe mortgage rates will head higher rush to list houses before financing tightens, said Bob Edelstein, co-chair of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.