California Economic Update, November 2012

The Department of Finance released its November 2012 Finance Bulletin which includes the following review of the latest economic indicators for California.

Home building gradually improved during the first half of 2012. Rising demand for homes, coupled with limited inventories of homes for sale, have driven existing home prices up in recent months.

Construction

  • In July, residential permits were issued at a seasonally adjusted annual rate of 60,533 units—an increase of nearly 83 percent from a year earlier. With a seasonally adjusted annual pace of 30,800 units, single-family permits were up 59 percent. In the more volatile multi-family sector, permitting slowed from June to a pace of 29,800 units, but was up over 117 percent from July 2011. 
  • New home permitting during the first seven months of 2012 was up over 16 percent from the same months of 2011, led by multi-family permitting. The pace of total new residential permitting during the three months ending with July increased over 31 percent from the same months of 2011.
  • After posting strong gains early in the year, the pace of nonresidential construction slowed significantly starting in April.  The pace of nonresidential permitting during the three months ending with July slowed nearly 24 percent from the same months of 2011. In July, the pace was down over 34 percent in from a year earlier.

Real Estate

  • Existing single-family home prices rose strongly in recent months, driven in part by a limited supply of homes for sale resulting in a restrained pace of sales. 
  • The median price of existing, single-family homes sold in September was $345,000, nearly a 20-percent increase from a year earlier. The median price of homes sold in the third quarter of 2012 rose 16 percent over the year.
  • Sales of existing, single-family detached homes totaled 484,240 units at a seasonally adjusted annualized rate in September, essentially the same pace posted a year earlier. The pace of sales during the first nine months of 2012 increased only 5.6 percent from the same months a year earlier.
  • Existing home inventories have fallen substantially. The California Association of Realtors’ unsold inventory index stood at 3.7 months in September, which was a 30-percent drop from the 5.3 months reached in September 2011. 
  • Similarly, the median number of days needed to sell a home dropped to 39.3 days, down almost 15 days from September 2011.
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