San Diego Home Sales Double Dip

San Diego home sales fell 20% in May according to a report issued today by Dataquick. DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Keep in mind that from March through August is typically the hottest time for real estate activity. So, a 20% drop in home sales right in the middle of this period is a harsh reality for those in double dip denial.

The 1,152 new homes sold in Southern California in May represents the fewest home sales for May going all the way back to 1988! On average, sales between April and May have increased 5.7 percent since 1988, when DataQuick’s statistics begin.

So, now we know the bad news on sales, what about home prices? Unfortunately, Dataquick had more bad news on home prices for May. In Southern California the median home price was down 8.2 percent compared to May2010. San Diego County was only about half of that at 4.6%.

In the overall market, sales fell across all price categories last month compared with a year earlier. In percentage terms, sales in the lower and higher price ranges held up best: Transactions below $200,000 made up 30.6 percent of last month’s deals, up from 26.8 percent a year earlier. Sales of homes priced at $800,000 or more made up 7.5 percent of last month’s total sales, the same as a year ago.

When I look at this data, it seems very ominous, not so much for the home price drop, but, more importantly for the double digit drop in sales. Home sales always lead home prices. With this huge drop in home sales at a traditional busy real estate activity season, combined with a low interest rate environment, could be be the predecessor to a very rough Fall/Winter period.