California’s April Home Sales Plummet by 36% Year-on-Year

California Home Sales Witness Steep Decline in April Amid Mortgage Rate Surge

The California Association of Realtors (C.A.R.) reports that the surge in mortgage interest rates had a profound impact on California’s housing market in April 2023, leading to a significant suppression in home sales. Concurrently, the statewide median home price surpassed the $800,000 mark for the first time in six months.

In April, the closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 267,880, as per data collected by C.A.R. This figure represents the hypothetical total number of homes sold in 2023 if sales maintained the April pace throughout the year, adjusting for typical seasonal factors.

Compared to March, April’s sales pace witnessed a decline of 4.7 percent, dropping from 281,050. Moreover, on a yearly basis, sales plummeted by 36.1 percent from the revised 418,970 homes sold in April of the previous year. This marks the seventh consecutive month where sales remained below the 300,000-unit pace.

C.A.R. President Jennifer Branchini noted, “While home sales declined in April, the market is getting more competitive, with time on the market before selling decreasing to 20 days in April from 33 days in January. Additionally, the share of homes sold above asking price doubled from one in five at the beginning of the year to more than two in five in April.” This increased market competition supported the statewide median home price, which rose above $800,000 for the first time in six months.

In April, California’s median home price surged to $815,340, marking a 3.0 percent increase from March’s $791,490. However, on a year-over-year basis, the median price witnessed a significant decline of 7.8 percent from the revised $884,680 recorded in April of the previous year. This decline was partly attributed to the strong price surge in early 2022, driven by buyers rushing into the market to capitalize on low rates before the Federal Reserve’s rate hikes.

C.A.R.’s Senior Vice President and Chief Economist Jordan Levine highlighted that the lock-in effect tightened housing supply, leading to a 30 percent year-over-year drop in new statewide active listings—the largest drop since May 2020. Additionally, a surge in borrowing costs, with mortgage rates surpassing 7% in late February and early March, contributed to the market’s weakness.

In response to the market conditions, C.A.R. revised its 2023 Housing Market Forecast, projecting existing single-family home sales to reach 279,900 units, representing an 18.2 percent decline from 2022.

Despite the anticipated improvement in home prices in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the annual median price of $822,300 recorded in 2022. C.A.R. also forecasts the 30-year fixed mortgage interest rate to average 6.3 percent for the year.

Key Insights from C.A.R.’s April 2023 Resale Housing Report:

Regional Sales Declines: Sales declines accelerated across all regions, with the Central Coast experiencing the steepest drop at -42.8 percent. The Far North (-41.8 percent) and the San Francisco Bay Area (-38.5 percent) closely followed, with significant declines also observed in Southern California (-37.4 percent) and the Central Valley (-36.7 percent). Each region saw a decline of more than a third on a year-over-year basis.
County-Level Sales Decline: All 51 counties tracked by C.A.R. reported a sales decline from the previous year, with 44 counties experiencing drops of more than 30 percent. Mariposa (-80.8 percent), Calaveras (-59.0 percent), and Santa Cruz (-58.4 percent) saw the largest declines, while Lassen (-4.8 percent) was the only county with a decrease of less than 10 percent.
Regional Median Home Prices: Median home prices continued to drop from a year ago in all major regions. The San Francisco Bay Area (-16.7 percent) witnessed the largest decline, followed by the Central Valley (-8.0 percent) and Southern California (-6.2 percent). Only one region posted a double-digit decline, contrasting with three regions in the previous month.
County-Level Median Home Prices: More than three-quarters of all counties experienced year-over-year price declines in April. Mono (-50.1 percent) saw the largest drop, while Glenn (24.1 percent) recorded the biggest gain. Twelve counties registered an increase in median price from the previous April.
Housing Inventory: Housing inventory bounced back after two consecutive months of decline, with the statewide Unsold Inventory Index (UII) increasing by 38.9 percent on a year-over-year basis. All price ranges recorded an increase in the UII, with the $1 million and higher price sector gaining the most.
Median Days to Sell: The median number of days it took to sell a California single-family home was 20 days in April 2023, compared to 11 days in April 2022.
Sales-Price-to-List-Price Ratio: C.A.R.’s statewide sales-price-to-list-price ratio was 100 percent in April 2023, indicating that homes sold for their listed price on average.
Average Price per Square Foot: The statewide average price per square foot for an existing single-family home was $395 in April 2023, down from $433 in April of the previous year.
Mortgage Interest Rates: The 30-year fixed-mortgage interest rate averaged 6.34 percent in April 2023, marking an increase from 4.98 percent in April 2022, according to Freddie Mac.