The North State Building Industry Association reported 643 new home sales in May 2006 in the 166 new home communities it tracks, down from 682 sales in April 2006. The housing market continues on a course of correction that began in August of last year, following three years and seven months of a very hot market for the Sacramento region. The moderation in sales this year represents a good opportunity for those seeking to purchase a new home, with builders offering generous incentives and creative financing packages.
The Placer County (Roseville, Rocklin, Lincoln, Granite Bay) area had 29.5% of the sales in the region in May. The Yuba City/Marysville area had 16.5% of the sales, while the Antelope, North Highlands, Natomas, North Sacramento area had 15% of sales. The Vineyard/South Sacramento (Elk Grove) area totaled 12.5% of the region's new home sales.
46% of new home sales in May were priced between $250,000 and $400,000. 33.5% of sales fell in the $400,000-500,000 range. The remaining 20.5% of new homes sold were priced in the $500,000 and up range.
30-year fixed-rate mortgages (FRM) averaged 6.67% for the week ending June 1, 2006, up from the previous week's average of 6.62%, according to Freddie Mac. Last year at this time, the 30-year FRM averaged 5.62%.
"The Fed released the minutes of its most recent FOMC meeting, which showed that some members were concerned about inflationary pressure. This caused the bond market yields to rise, and brought about market speculation that the Fed may hike rates sooner than had been expected," said Frank Nothaft, Freddie Mac vice president and chief economist. "All this combined to nudge rates up again this week.
"Higher mortgage rates will coincide with a cooling housing market. Although our forecast is for slightly higher rates, the rise will be gradual and orderly over the year."
The unemployment rate in the Sacramento-Arden-Arcade-Roseville MSA was 4.6 percent in April 2006, down from 4.7 percent in March 2006, and the same as the year-ago estimate of 4.6 percent. This compares with an unadjusted unemployment rate of 4.8 percent for California and 4.5 percent for the nation during the same period. The unemployment rate was 4.7 percent in El Dorado County, 4.0 percent in Placer County, 4.6 percent in Sacramento County, and 5.5 percent in Yolo County.
Between March 2006 and April 2006, the total number of wage and salary jobs increased by 3,000 to reach 904,700. Gains were somewhat isolated to a few industries and some seasonal gains were likely smaller due to above normal precipitation.
Notably, two industries picked up jobs despite the rain. Farmers, some whose crops were either damaged or set back, expanded by 1,100 jobs, and construction picked up 300 jobs, as employers struggled with saturated conditions.
Professional and business services contributed 800 jobs, most of that came from employment services, while jobs in private education were up by 300 and local public schools payrolls rose by 200.
Most other industries were either unchanged or gains were relatively small.
Between April 2005 and April 2006, the total number of jobs increased by 22,500, a 2.6 percent increase.
Two industries accounted for nearly half of the increase. Professional and business services contributed 5,600 jobs and leisure and hospitality added 5,400 jobs. Generally, most sub sectors contributed, but the largest gains came from employment services and restaurants.
Government payrolls were up by 3,900, a nearly even split between state and local sectors, while 1,400 jobs came from local schools. Trade, transportation and utilities expanded by 4,700, a balanced mix of jobs coming from retail, wholesale and transportation. Manufacturing was up by 2,200, while jobs in financial activities and health services were up by 1,700 and 1,200, respectively.
Despite concerns about a housing market slowdown, construction remains up by a relatively small margin and rain contributed to farm jobs that are below the levels of last year. Declines were also observed in information and other services sectors.
The number of new home sales in each price range is listed below:
Price Ranges: May 2006 / Year-to-Date Under $250,000 -- 0 / 0 $250-300,000 -- 22 (3.5%) / 108 (3.5%) $300-350,000 -- 131 (20.5%) / 584 (19.5%) $350-400,000 -- 142 (22%) / 542 (18%) $400-450,000 -- 123 (19%) / 773 (25.5%) $450-500,000 -- 94 (14.5%) / 431 (14.5%) 500-550,000 -- 92 (14%) / 346 (11.5%) $550-600,000 -- 23 (3.5%) / 95 (3%) $600-750,000 -- 12 (2%) / 102 (3.5%) $750-1,000,000 -- 5 (1%) / 38 (1%) $1,000,000 and over -- -1 (xxx%) / 1 (xxx%)
TOTAL -- 643 / 3,020
Note: The above figures and percentages are calculated on the average price for all new homes sold in each community. The North State Building Industry Association is a trade association representing 950 member companies in a 20 county area of northern California.
Have a fantastic week,
State of California Department of Real Estate License #01293196
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