Even as Los Angeles County's median home price continued to break records in May, the number of homes sold often a leading indicator of a looming market correction continued to drop.
The $550,000 countywide median price for existing homes in May was 16 percent higher than a year earlier and 1 percent higher than the previous month, according to data provided to the Business Journal by HomeData Corp., a Mellville, N.Y. company that tracks housing prices nationwide.
Even so, clouds are on the horizon.
There were 8,949 homes sold last month, 17 percent fewer than a year ago. And the 35,558 homes sold to date this year is off 15 percent from the first five months of 2005.
The drop in sales volume has contributed to an accumulating inventory of available homes which are staying on the market longer. The California Association of Realtors estimates that as of April, homes in L.A. County were staying on the market a median 35 days, compared to 25 days a year ago. There was 5.6 months of inventory in the overall Los Angeles market in April, compared to just two months' worth a year ago.
Six months worth of inventory is generally considered a balanced market for both buyers and sellers. A hot topic among real estate professionals at a statewide CAR meeting in Sacramento last week centered on the challenges of convincing sellers to lower their expectations.
"We've transitioned to a slower market," said Leslie Appleton-Young, the association's chief economist. "But you've got a situation where sellers are still tied to prices that would have been appropriate a year ago, when inventory was significantly lower."
May sales volume was up 25 percent from April as the market gears up for summer, typically the biggest sales months.
"Once we have the full second quarter numbers in, we'll have a better idea of how we're doing, going into the peak selling season," said Patrick Duffy, managing director of consulting for Costa-Mesa-based Hanley Wood Market Intelligence. "But we're coming off what historically were very high numbers, which were fueled by low interest rates. It was going to be hard to maintain that."
The drop off in sales is even being seen in the affordable Antelope Valley's Lancaster, whose three ZIP codes have accounted for 5 percent of the county's total sales volume. In May, sales were off 10 percent from a year ago, though the median price continued to appreciate by double digits, up 21 percent in the 93534 and 93535 ZIP codes and by 17 percent in the 93536 ZIP, which had the highest median price in that city at $380,000.
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