California’s housing market continues to face challenges with the third consecutive monthly decline in home sales for August, according to a report from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The decline is attributed to rising mortgage rates and a shortage of available homes for sale. However, despite these obstacles, the median home price in the state saw its highest year-over-year gain in 15 months.
In August, closed escrow sales for existing, single-family detached homes in California reached a seasonally adjusted annualized rate of 254,740. This reflected a 5.3 percent decrease from July and an 18.9 percent drop from the previous year. It marks the 11th consecutive month where sales have remained below the 300,000-unit pace. Year-to-date statewide home sales were down 29.2 percent in August.
Despite the decline in sales, the statewide median home price rose to $859,800 in August, a 3.3 percent increase from July and a 3.0 percent surge from the previous year. This represents the highest median price in 15 months and the highest since California’s peak price in May 2022.
Jennifer Branchini, President of C.A.R., noted that despite the challenges of high mortgage rates and limited inventory, prospective buyers are still interested in the housing market. She anticipates that as interest rates stabilize in the fourth quarter, buyers and sellers who have been waiting on the sidelines will re-enter the market.
Jordan Levine, C.A.R.’s Senior Vice President and Chief Economist, explained that the combination of elevated interest rates since April and limited housing inventory has led to a seven-month low in home sales. However, he expects macroeconomic fundamentals to soften in the last quarter of the year, which will gradually ease mortgage rates and support both the supply and demand sides of the housing market.
Here are some key points from C.A.R.’s August 2023 resale housing report:
– All major regions in California experienced double-digit sales declines in August compared to the previous year.
– 43 out of the 52 tracked counties also saw a decrease in sales compared to August last year.
– The statewide unsold inventory index (UII) was 2.4 in August, down 14.3 percent from the previous year.
– Active listings at the state level have been falling year-over-year for five consecutive months, with over 20 percent declines in the last four months.
– The median number of days to sell a California single-family home was 18 days in August.
– The 30-year fixed-mortgage interest rate averaged 7.07 percent in August, up from 5.22 percent in August 2022.
While the California housing market continues to face challenges, there is optimism that the stabilization of interest rates and a gradual easing of inventory constraints will help support future growth and activity in the market.