California Home Sales Show No Growth in October

California Housing Market Remains Static in October Amid High Mortgage Rates

The latest data from the California Association of Realtors (C.A.R.) reveals that the California housing market showed minimal movement in October 2023, with mortgage rates staying high and housing inventory remaining limited.

In October, the closed escrow sales of existing, single-family detached homes in California reached a seasonally adjusted annualized rate of 241,770.

This figure represents the projected total number of homes sold throughout 2023 if sales maintained the pace observed in October, adjusted to consider seasonal factors affecting home sales.

Compared to September, October’s sales pace saw a slight increase of 0.3 percent, rising from 240,940 units. However, it marked a significant decline of 11.9 percent from the previous year, when a revised 274,410 homes were sold on an annualized basis.

This marked the second consecutive month where sales remained below the 250,000-unit threshold and marked the 28th consecutive month of annual sales decline, although the decline was the smallest in the last four months.

C.A.R. President Jennifer Branchini commented on the restrained sales, attributing it to a notable increase in interest rates. She suggested that elevated rates could continue to impact sales for the remainder of the year.

However, she noted that despite the high rates, recent market trends, such as longer listing periods and fewer homes selling above list price, could encourage sellers to offer concessions, potentially balancing market dynamics.

Although the median home price in October experienced a slight decline from September, dropping 0.4 percent from $843,340 to $840,360, it marked a robust 5.3 percent increase from the previous year’s figure of $798,140.

This upward trend in prices over the past four months represents the largest year-over-year gain in 17 months. While prices typically stabilize in the coming months following seasonal patterns, positive year-over-year growth is expected to persist due to continued tight housing supply.

C.A.R.’s Senior Vice President and Chief Economist, Jordan Levine, pointed to recent economic indicators suggesting a slowing economy and the Federal Reserve’s decision to pause rate hikes as factors contributing to a decline in mortgage rates in recent weeks.

He suggested that if inflation continues to decrease, mortgage rates could further improve in 2024, potentially alleviating pressure on both buyers and sellers in the housing market.

Insights into California Housing Market Trends for October 2023

The California Association of Realtors (C.A.R.) has released key data points highlighting the status of the California housing market in October 2023, shedding light on various regional and county-level trends:

Regional Sales Trends:

• Most major regions witnessed a year-over-year decline in October home sales, with the Central Valley region experiencing the largest drop of -11.3 percent. The Southern California (-7.4 percent) and San Francisco Bay Area (-3.9 percent) regions also saw decreases, while the Central Coast region (1.9 percent) was the sole region to observe an increase in sales.

County-level Sales and Price Movements:

• Thirty-six out of 52 counties tracked by C.A.R. reported a decline in sales compared to the previous year, with notable decreases in Del Norte (-47.4 percent) and Stanislaus (-28.0 percent). However, fifteen counties saw an increase in sales, with Trinity (600 percent) exhibiting the most substantial growth.
• Home prices varied across counties, with median prices dropping in thirteen counties and rising in thirty-nine. Tehama (35.8 percent) experienced the largest price surge, while Del Norte (-21.1 percent) saw the most significant decline.

Price-to-List-Price Ratio and Days on Market:

• The statewide sales-price-to-list-price ratio remained steady at 100 percent in October 2023, indicating strong demand relative to listing prices.
• The median number of days to sell a single-family home was 20 days, reflecting a competitive market environment.

Other Metrics:

• Active listings continued to decline on a year-over-year basis, with nearly two-thirds of counties experiencing decreases. However, the rate of decline has slowed compared to previous months.
• New active listings decreased for the 16th consecutive month, but the rate of decline showed signs of deceleration.

Mortgage Rates:

• The 30-year fixed-mortgage interest rate averaged 7.62 percent in October 2023, representing an increase from the previous year’s rate of 6.90 percent.

Overall, the California housing market in October 2023 remained characterized by regional variations in sales and price movements, tight inventory levels, and elevated mortgage rates.