In January 2024, California’s existing home sales bounced back, reaching the highest level in six months. This surge was attributed to a significant decrease in mortgage rates towards the end of 2023.
Closed escrow sales of existing single-family detached homes in California hit a seasonally adjusted annualized rate of 256,160 in January, according to data from the California Association of Realtors (C.A.R.).
This figure represents the total number of homes that would be sold in 2024 if sales maintained the January pace throughout the year, factoring in seasonal influences.
January’s sales pace marked a 14.4 percent increase from the revised figure for December, with 224,000 homes sold. Although down by 5.9 percent from the previous year, this uptick marked the first year-over-year sales gain in 31 months.
However, the sales pace continued to remain below the 300,000-unit threshold for the 16th consecutive month, likely persisting below that level throughout the first quarter of 2024. While February is expected to see year-over-year sales growth, it will likely be moderate given the stabilization of interest rates.
C.A.R. President Melanie Barker expressed optimism about the positive sales growth in January, anticipating some fluctuations in the coming months as interest rates continue to fluctuate. However, with a more favorable lending environment expected in 2024, pent-up demand is anticipated to translate into increased sales.
Although California’s median home price decreased by 3.8 percent from December to $788,940 in January, it still reflected a 5.0 percent year-over-year gain, marking the seventh consecutive month of annual price increases.
This decline was largely due to seasonal factors, with January being the first time in ten months that the median price dropped below the $800,000 mark. However, with mortgage rates softening since mid-October, home prices are expected to maintain an upward trajectory, with a mid- to single-digit year-over-year growth rate projected for the early part of 2024.
C.A.R.’s Senior Vice President and Chief Economist, Jordan Levine, highlighted the positive impact of an increase in new active listings, breaking a 19-month streak of declines. However, he cautioned that rising rates due to inflation concerns might prompt potential home sellers to delay listing their properties.
Nevertheless, a decline in rates later in the year is anticipated, coupled with a gradual improvement in available inventory throughout 2024.
Highlights from C.A.R.’s January 2024 Resale Housing Report:
In January 2024, sales of existing single-family detached homes in California experienced a year-over-year increase across all major regions. The Central Valley region led with a 12.5% rise, followed by the Far North (6.8%), San Francisco Bay Area (6.2%), and Central Coast (5.2%).
Even Southern California saw a modest increase of 2.2%. However, 14 out of 52 counties tracked by C.A.R. witnessed a decline in sales, with Mono County registering the largest dip at 50%.
On the price front, most major regions reported an annual increase in median prices. The San Francisco Bay Area saw the highest jump at 10.6%, while Southern California, Central Valley, and the Central Coast also experienced growth.
The Far North was the only region to record a price decline of -2.0%. Despite fluctuations, home prices showed improvement in 41 counties, with Santa Barbara leading at 43.8%.
While unsold inventory increased by 28% on a month-over-month basis, it decreased by -8.6% compared to January 2023.
The Unsold Inventory Index dropped from 2.5 months in December to 3.2 months in January, signaling a slightly tighter market.
Active listings declined year-over-year in 35 counties but increased in 16 counties, with Contra Costa experiencing the largest dip at -36.0%.
New active listings statewide increased for the first time in 19 months, indicating a potential improvement in overall inventory.
The median days to sell a California single-family home decreased from 39 days in January 2023 to 32 days in January 2024.
Additionally, the statewide sales-price-to-list-price ratio was 98.9% in January 2023, showing sellers’ ability to fetch prices close to their listing prices.
The average price per square foot for an existing single-family home rose to $386 in January 2024 from $370 a year ago.
However, the 30-year fixed-mortgage interest rate averaged 6.64% in January, up from 6.27% in January 2023, potentially impacting affordability and buyer demand.
Overall, while California’s housing market witnessed positive trends in sales and prices in January 2024, challenges such as inventory shortages and increasing mortgage rates persist, influencing market dynamics and buyer-seller interactions.
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