California’s Housing Supply Dwindles Despite Increase in Prices

Although the median price for existing homes in California soared 15 percent from January 2009 to January 2010, the state's housing supply continued to decrease, the ""California Association of Realtors"":http://www.car.org/ (C.A.R.) reported Tuesday.

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C.A.R.'s unsold inventory index, which indicates the number of months needed to deplete the supply of existing, single-family homes on the market at the current sales rate, fell to 5.8 months in January, a notable drop from 7.3 months during the same month last year.

Despite the fact that the state's backlog of homes is decreasing, home sales appeared to be strongly affected by the double-digit increase in prices. On a year-to-year basis,

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statewide home sales in January decreased 10.6 percent, and compared to December, sales fell 3 percent. However, Steve Goddard, C.A.R. president, said sales remained above the 500,000 unit threshold for the 17th consecutive month, holding steady at pre-peak levels from early in the last decade.

While home prices in January surged from the same period last year, month-to-month data showed a different story. The median price of an existing, single-family detached home in California during January 2010 was $287,440, plummeting 6.3 percent from December's median price of $306,820.

""The story for the median price in January was mixed,"" said Leslie Appleton-Young, C.A.R. VP and chief economist.

In year-over-year terms, Appleton-Young said California's median home price saw the greatest percentage increase since December 2005. And while the month-to-month decline was large, she said it was less than the declines for the same time period in both 2008 and 2009 when the median price fell by more than 11 percent.

""The median price still is 17.2 percent ahead of the trough in this cycle,"" Appleton-Young added. ""However, the expiration of the federal tax credit for home buyers and the impact of the Federal Reserve's withdrawal from the mortgage market continue to be the wild cards as we move through the year.""