California's real estate markets appear to be cooling down from their recent
overheated performance. While home prices continue to rise, the pace has slowed
noticeably in recent months. New home construction, meanwhile, is still maintaining
a commendable and sustainable pace.
- Home building regained some lost momentum in August. Permits
were issued for 208,000 residential units on a seasonally adjusted annual
rate basis, an improvement on the 202,000-unit pace set in July. Improved
single-family construction outweighed a drop in multi-family building. The
July-to-August performance is consistent with the seesaw pattern that residential
construction has followed throughout 2004. For the first eight months of the
year as a whole, residential construction permitting is up over 5 percent
from the same months of 2003.
- Nonresidential building slowed in August, for the second
consecutive month following remarkably strong permitting activity in June.
Total nonresidential construction in August reached a seasonally adjusted-annual
rate of $15.4 billion, as measured by the value of permits issued. Despite
this slowdown, office construction-an indicator of general business conditions-made
a sharp acceleration in August. Office building permit issuances were up substantially
from a year ago. On a year-to-date basis, nonresidential construction is running
nearly 11 percent ahead of the first eight months of 2003.
- California's home prices continued to rise in August, but
the trajectory has flattened in recent months. The median home price rose
over 12 percent during the first four months of 2004. Since then, the median
has risen just 4.6 percent. From May through August, the median price rose
an average of 1.1 percent each month. While impressive, this is considerably
slower than the 1.9 percent average monthly gain made during the 12 months
ending in April. The median price of existing single-family homes sold in
August, $474,370, was an 18.6 percent increase from a year ago.
- Rising home prices may finally be taking their toll on home
sales. Sales of existing single-family homes cooled in August, dropping 7.6
percent from July, to 591,000 units on a seasonally adjusted-annual rate basis.
Home Price Run-Up Slows
Monthly Cash Report
Preliminary General Fund agency cash for September was $332 million above the
2004 Budget Act forecast of $7.979 billion. Year-to-date, revenues are $564
million above expectations. September is a significant month for both the personal
income and corporation taxes because the third estimated payment for calendar
year filers was due in mid-September.
- Personal income tax revenues were $10 million above
the month's forecast of $4.057 billion. Withholding receipts came in $57 million
below the month's estimate of $2.157 billion - a 3.4-percent year-over-year
growth rate. Estimated payments were $29 million above the projected level
of $1.774 billion and all other receipts were $24 million higher than the
forecasted $291 million. Refunds came in $14 million under the estimate of
$165 million. Year-to-date, personal income tax revenues are $42 million above
- Sales and use tax receipts were $8 million above the
month's forecast of $1.950 billion. September represents the second prepayment
for third quarter taxable sales. Final payments for this quarter will be received
in late October and early November, providing a more complete picture of third
quarter activity. Year-to-date, the sales tax cash matches expectations.
- Corporation tax revenues were $373 million above the
month's forecast of $1.32 billion. Prepayments were $293 million above the
forecast of $1.272 billion and miscellaneous payments were $39 million more
than the $159 million that was expected. Refunds were $41 million less than
the forecast of $111 million. Year-to-date, corporation tax receipts are $484
million above estimate.
- Revenues from the insurance, estate, alcoholic beverage,
and tobacco taxes came in $20 million below the $539 million that was expected,
due to lower-than-expected insurance tax receipts. The remaining revenues-pooled
money interest income and "other" revenues-were $39 million below
the month's estimate of $113 million. Both of these revenue sources were below
General Fund Agency Cash
2004-05 Budget Act Forecast
2004-05 Comparison of Actual and Forecast
Agency General Fund Revenues
For more information, please contact the
California Department of Finance,
Room 1145, State Capitol, Sacramento, CA or call (916) 323-0648.
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