Tuesday, February 28, 2006

Sacramento Sales "Dropped Like a Rock"

The Sacramento Business Journal reports on dismal January sales.

Home sales dropped like a rock in January
January was not a good month for home sales in Sacramento or the state, according to a report released Tuesday by the California Association of Realtors. In Sacramento, 31 percent fewer homes were sold in January than in December, a mark that was also 32.4 percent below January 2005. The median price of an existing home in Sacramento dropped to $373,370, 1.5 percent less than the median December price, but still 7.8 percent higher than a year ago...

"The California real estate market is beginning to experience the soft landing that we expect to be the underlying dynamic driving the housing market this year," CAR vice president and chief economist Leslie Appleton-Young said in a statement. "The number of homes for sale has risen to a six-month supply, which will translate into a slower rate of price appreciation than we experienced in 2005."
Slower rate of price appreciation? Presumably this means year-over-year price increases. Sacramento's y-o-y price appreciation is rapidly cooling and should go negative in the next few months if current trends continue (exploding inventory, shrinking sales, new home firesales, rising interest rates, and five months of median price declines). Time for a new word to enter CAR's vocabulary: depreciation.