High interest rates and a shortage of homes for sale continue to slow down the housing market statewide, according to a new report from the California Association of Realtors.
California's June home sales indicate that overall sales activity is on pace to be lower than in 2022. The June Sales and Price Report shows that sales in June fell below last year's 300,000 annualized pace ( a figure which represents what would be the total number of homes sold during 2023 if sales maintained the June pace throughout the year). This is the ninth consecutive month that the annualized pace remained below 300,000 with nearly 80% of all counties experiencing a dip in active listings compared to last year, according to the report.
In the San Francisco Bay Area, overall June sales fell 19.2% from a year ago, with Santa Clara County, seeing June home sales drop 14% compared to the same time last year and 3.5% compared to the previous month. San Mateo was the only county in the region whose sales increased both year-over-year (3.4%) and month-over-month (14.8%).
According to information collected by California Association of Realtors from more than 90 local Realtor associations and Multiple Listing Service organizations statewide, sales of single-family homes in the state during June were down 4.1% on a monthly basis compared to May and down 19.7% compared to the same time last year. Realtor association officials, however, noted that June marked the first time in a year that sales dropped by less than 20% compared to the previous year.
“California’s housing market has improved since the winter and appears to have found its footing as sales declined at the slowest pace in over a year,” said California Association of Realtors President Jennifer Branchini, who is a Bay Area Realtor. “Despite elevated interest rates, the demand for housing continues to outpace the availability of homes for sale, as buyers slowly adapt to the new normal under the current housing market conditions.”
June's statewide median price of $838,260 reached the highest level in 10 months, exceeding $800,000 for the third straight month. The median home price was up 0.3% from May’s median of $836,110. The median home price compared to June 2022, however, dipped 2.4% from $858,800.
Jordan Levine, chief economist for the California Association of Realtors, said more dips in the median price are expected in the coming months as interest rates will likely remain elevated for most, if not the entire third quarter of 2023. The 30-year, fixed-mortgage interest rate averaged 6.71% in June, up from 5.52% compared to June 2022, according to Freddie Mac.
“Buyer demand appears to have stabilized after rates doubled last year, though rates could still move higher in the coming months,” Levine said. “(If) inflation finally subsides later this year, the market could see some improvement as rates and supply conditions start turning around.”
On the Midpeninsula, San Mateo County saw its median price drop, while Santa Clara County saw prices increase, according the report. The June median sales price in San Mateo County was $2,039,000, down 5.4% from $2,155,000 in June 2022, and down 1.7% from $2,075,000 during the previous month in May. On the other hand, Santa Clara County's June median home price of $1,825,000 was up 0.3% from June 2022 and up 2.1% from $1,788,000 during the previous month in May.
"Tight housing supply continues to be the norm and why the number of home sales are down," Jim Hamilton, president of the Silicon Valley Association of Realtors, said. "Home prices have moderated. Price gains are smaller, which is an indication that home values are stabilizing. In some neighborhoods, high-end homes are placing upward pressure on prices."
The statewide sales-price-to-list-price ratio was 100% in June compared to 101.3% during the same time last year and shows, that in June, sellers were receiving their list or asking price. The ratio reflects the negotiation power of homebuyers and home sellers under current market conditions. A sales-to-list ratio with 100% or above suggests that a property sold for more than the list price.
The median number of days it took to sell a California single-family home was 15 days in June, a day more than in June of last year. At the regional level, the median number of days it took to sell a home in June was 10 days in San Mateo County and eight days in Santa Clara County.
"Homes are selling at a fast pace in the region. Data from MLSListings indicates home sellers are still receiving a median 3% over listing in San Mateo County and 5% above asking price in Santa Clara County," Hamilton said. "Despite all the banter about Silicon Valley crashing, this shows buyers know there is value in purchasing a home here."
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
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