The lowest mortgage rates in five months helped boost California home sales to reach above the 250,000-unit annualized sales pace for the first time in four months, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 284,010 in February, according to information collected by C.A.R. from more than 90 local REALTOR associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2023 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
February’s sales pace was up 17.6% monthly from 241,520 in January and down 33.2% from a year ago when a revised 425,120 homes were sold annually. Despite the third straight monthly improvement, sales of existing single-family homes in California remained below the 300,000-unit pace for the fifth consecutive month.
“A brief interest rate reprieve and softer home prices during January created a window of opportunity for homebuyers to dip their toes into the home-buying waters, which helped boost home sales to the highest level in five months,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR®. “A shift toward more home sales in the lower-price segments is expected to soften home prices further. However, with the availability of homes remaining extremely tight and housing supply conditions not expected to improve soon, prices should find a bottom later this year as interest rates stabilize.”
California’s median home price retreated for the sixth straight month in February, declining 2.1% from January’s $751,330 to $735,480, the lowest price level in two years. February’s price also was lower on a year-over-year basis for the fourth consecutive month, declining 4.8 % from the revised $772,180 recorded last February.
The median price for a typical home at the state level has declined 18.3 % since May 2022, when it reached its peak of $900,170. With home prices expected to remain soft throughout the rest of 2023, the market will see larger price drops moving through the spring home-buying season.
“The recent failure of a handful of tech-focused banks caused an unexpected drop in interest rates, which could offer an opportunity in the near term for homebuyers who have been waiting on the sidelines to lock in a lower rate,” said C.A.R. Vice President and Chief Economist Jordan Levine. “However, any rate decline is not likely to be sustainable since inflation remains high, and the Federal Reserve is willing to take some calculated risks to keep inflation under control.”
Other key points from C.A.R.’s February 2023 resale housing report include:
At the regional level, all regions except the Central Valley (-28.6%) continued to record sales declines of more than 30 % from a year ago, with the Far North dropping the most at -39.4 %. Four of the six counties in the region registered dips of more than 35 % year-over-year in February. Central Coast (-38.3 %) was another region with a sales drop of over 30 %, followed by Southern California (-33.8 %) and the San Francisco Bay Area (-32.0 %).
All counties tracked by C.A.R. experienced double-digit sales drops in February on a year-over-year basis, with sales in 34 counties plummeting more than 30 % and eight counties registering drops of more than 50 % from a year ago. The sharp sales decline in some of these counties was attributed partly to the severe weather conditions experienced in the past few weeks throughout California. Mono County (-80.0 %) had the largest sales drop in February 2023, followed by Lassen (-73.9 %) and Glenn (-65.0 %). Only four counties ― Kings (-10.5 %), Placer (-11.2 %), Amador (-14.3 %), and San Mateo (-17.2 %) ― out of the 51 counties monitored by C.A.R. had a sales decline of less than 20 % in February 2022.
At the regional level, median home prices dropped from a year ago in all major regions, with the San Francisco Bay Area declining the most and by double-digits year-over-year. With prices sliding more than 13 % in six Bay Area counties, the Bay Area’s regional median price was down 19.2 % from a year ago and the dip in February was the largest price decline since June 2009. The uncertainty in the tech sector was partially responsible for the home price declines, but the sharp price drop also could be attributed to the price surge a year ago, when four of the six counties with double-digit price declines also registered price increases of more than 10 % last February. Median prices in the state’s other regions experienced more moderate declines, with the Central Coast’s median price decreasing 6.2 %, followed by the Central Valley (-3.4 %), Southern California (-2.0 %) and Far North (-1.6 %).
More than four out of five counties experienced year-over-year price declines in February, with 23 counties posting median price drops of more than 10 %. Siskiyou (-38.8 %) had the sharpest decline of all counties, followed by Glenn (-28.5 %) and Del Norte (-23.1 %). Five counties registered an increase in their median prices from a year ago, with all counties growing by single digits. Kings recorded the biggest price gain of all counties at an increase of 7.6 % from a year ago, followed by Tehama (6.7 %) and San Bernardino (3.7 %).
Housing inventory in California slipped to the lowest level in four months. Despite dipping from the month prior, the statewide unsold inventory index (UII) grew 60 % from the 2.0 months recorded in February 2022 and registered 3.2 months in February 2023.
All price ranges posted an increase in UII from a year ago by 30 % or more, with the sub-$500,000 range gaining the most (45.9 %), followed by the $500,000-$750,000 range (42.3 %), the $1 million and up (33.4 %) and $750,000-$999,000 category (30.0 %).
Click here to read the full report from C.A.R.
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