Last month we mentioned that we anticipated sales in the Silicon Valley to increase as we move through the first quarter, and that is exactly what happened in February. Closed sales increased 30% in the cities we follow. Inventory increased in five of the eight cities and, on average, rose 10% from January. Prices generally firmed up during February, with all cities recording higher sales price to list price ratios. Median sales prices were mixed, however, and fell slightly from January, as well as from a year ago.

A sign that the market is gaining momentum is the fact that time on the market dropped sharply in February, from 48 days in January to only 20 days in February. That was also 11 fewer days than a year ago.

Inventory increased 10% from January and 17% from February 2017. Only Menlo Park and Saratoga had fewer homes for sale at the end of February than at the end of January. However, 17% fewer homes were on the market at the end of February than there were a year ago.

Sunnyvale continues to be the hottest market in the area. Sales increased 21%, while days on the market declined and homes sold for nearly 110% of the average list price. Los Alto Hills and Los Gatos/Monte Sereno were the only communities with an average sales price below the average list price. However, both communities posted improvements in sales, inventory and time on the market.

As we would expect at this time of year, the beach communities of Aptos, Santa Cruz and Capitola, did not perform as well as the Silicon Valley. Inventory and sales declined, prices softened and homes stayed on the market longer.

Aptos had no change in ending inventory from January but a 33% drop (seven homes) in closed sales. The median sales price fell 15% but the ratio of sales price to list price increased from 98% in January to 99.5% in February. Homes were also on the market for 37 fewer days.

Santa Cruz and Capitola each added one home to inventory, while seeing prices soften and having properties remain on the market longer. Sales increased by four units in Capitola while falling three in Santa Cruz.

In the beach communities of Aptos, Santa Clara and Capitola, inventory was off 5%. Homes for sale increased in Santa Clara but declined in the other two cities. Sales fell during January, a result of season trends and low supply. Even so, more sales closed in January than did so a year ago.

The sales price to list price ratio increased in all three communities, while the median sales price increased in Aptos and Capitola. Time on the market decreased from December by nine days, on average, to 52 days during January. That was about the same as a year earlier.