California’s March 2023 Home Sales Experience a Sharp Decline
In March 2023, California’s housing market witnessed a notable downturn, with home sales plunging by 34.2 percent compared to the previous year, as reported by the California Association of Realtors (C.A.R.). This decline marks a significant departure from the revised figure of 427,040 homes sold annually in March 2022.
Additionally, the pace of home sales for March 2023 decreased by 1.0 percent compared to February 2023, maintaining a consistent trend of subdued sales activity for the sixth consecutive month.
Existing single-family detached homes in California saw closed escrow sales totaling 281,050 units on a seasonally adjusted annualized rate in March 2023. This rate reflects the hypothetical total number of homes sold for the entire year if March’s sales pace were sustained. It’s a metric adjusted to accommodate seasonal fluctuations that typically influence home sales.
C.A.R. President Jennifer Branchini noted, “Despite the decline in March home sales, the housing market remains fiercely competitive, with properties selling at a rapid pace and sales-to-list-price ratios improving. However, the persistently tight inventory poses challenges for buyers.”
March brought a glimmer of price growth, with California’s median home price increasing by 7.6 percent from February to reach $791,490. However, this uptick was juxtaposed against a year-over-year decline of 7.0 percent from March 2022, marking the fifth consecutive month of such decreases.
This pattern suggests that while prices rose sharply last year, the market may see more substantial year-over-year declines as it progresses through the spring home-buying season.
C.A.R. Vice President and Chief Economist Jordan Levine commented, “Despite home sales lingering below the 300,000-unit annualized pace, the market has shown resilience against recent interest rate hikes and financial institution challenges.
Should interest rates stabilize or improve in the coming months, we anticipate a potential uptick in sales during the spring buying season, although limited inventory remains a restraining factor.”
California Real Estate Market Insights for March 2023: Key Highlights
The California Association of Realtors (C.A.R.) has released its comprehensive report on the state’s housing market for March 2023, revealing significant trends and developments across various regions and counties. Here are the key takeaways:
Regional Sales Performance:
- Most regions experienced substantial annual sales declines, with the Central Valley being the only exception, showing a 27.7 percent decrease.
- The Far North region witnessed the most significant drop at 38.9 percent, while the San Francisco Bay Area, Southern California, and the Central Coast saw declines of 35.5 percent, 33.8 percent, and 31.2 percent, respectively.
County-Level Sales Trends:
- Nearly all of the 51 counties tracked by C.A.R. observed a decline in sales compared to March of the previous year.
- Extreme weather conditions impacted housing markets, contributing to notable sales drops in certain counties, such as Plumas (-77.3 percent), Mono (-70.6 percent), and Glenn (-52.9 percent).
Median Home Prices:
- Median home prices dropped across major regions, with the San Francisco Bay Area experiencing the most significant decline of 12.8 percent.
- Santa Barbara (-40.8 percent) and Mono (-31.8 percent) were among the counties with the most substantial price drops, while a few counties, including Glenn, Kings, and Humboldt, saw price increases.
Housing Inventory:
- Housing inventory continued to tighten, with the statewide unsold inventory index (UII) increasing by 37.5 percent year-over-year.
- Active listings surged in some counties, such as Marin and Riverside, but declined in others like Mono and Alameda.
Days on Market and Price Trends:
- The median number of days to sell a single-family home in California was 19 days in March 2023, compared to 8 days in March 2022.
- The sales-price-to-list-price ratio stood at 99.1 percent, indicating strong demand relative to listing prices.
Mortgage Rates and Affordability:
- The 30-year fixed-mortgage interest rate averaged 6.54 percent, significantly higher than the previous year’s rate of 4.17 percent.
- The average price per square foot for existing single-family homes declined to $388 from $418 in March of the previous year.
Despite various challenges and fluctuations in the market, California’s real estate sector remains dynamic, with both buyers and sellers navigating changing conditions amidst evolving economic factors and housing dynamics.
