Elevated interest rates and a shortage of homes for sale continued to dictate the market in June, as California home sales remained below the 300,000 annualized pace for the ninth consecutive month, according to a recent report from the California Association of Realtors (C.A.R.).
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 277,490 in June, according to information collected by C.A.R. from more than 90 local realtor associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2023 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
June’s sales pace was down 4.1 percent every month from 289,460 in May and down 19.7 percent from a year ago, when a revised 345,760 homes were sold on an annualized basis. Sales of existing single-family homes in California remained below the 300,000-unit pace for the ninth consecutive month. The yearly drop was the smallest since May 2022 and marked the first time in a year that sales dropped by less than 20 percent from a year ago. However, the smaller decline was due primarily to weaker sales last June, when sales dropped below 350,000 for the first time in two years.
“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 C.A.R. president Jennifer Branchini, 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.” California’s median home price exceeded $800,000 in June for the third straight month, edging up 0.3 percent from May’s $836,110 to $838,260 in June.
The statewide median price continued to rise and reached the highest level in ten months. The tight housing supply and more high-end homes being sold relative to prior months continued to put upward pressure on prices. Despite the improvement from early 2023, the median home price in California dipped 2.4% on a year-over-year basis for the eighth consecutive month from $858,800 in June 2022. The downward movement in home prices appears to be stabilizing, but more dips in the median price are expected in the coming months as rates will likely remain elevated for most, if not the entire third quarter, of 2023. “Buyer demand appears to have stabilized after rates doubled last year, though rates could still move higher in the coming months,” said C.A.R. senior vice president and chief economist Jordan Levine. “As inflation finally sub- sides later this year, the market could see some improvement as rates and supply conditions start turning around.”
Other key points from C.A.R.’s June 2023 resale housing report include:
• Nearly half of all counties registered their median price in June, with prices in five counties surging more than 10 percent month-over-month. The price improvement from earlier this year in a high number of counties is an encouraging sign that housing values are stabilizing, but also a warning signal that housing affordability could remain low in the second half of the year.
• Housing inventory in California inched up in June from the prior month but dipped again from last year, as tight housing supply continues to be the norm. The statewide unsold inventory index in June 2023 dropped 8.3 percent from a year ago and increased 4.8 percent on a month-over-month basis. Active listings at the state level fell sharply by 34 percent from last year and registered the largest year-over-year decline since May 2021. With mortgage rates expected to be high in the next couple of months, California may not see any meaningful improvement in its housing inventory for the rest of the third quarter.
C.A.R. is headquartered in Los Angeles. Learn more at car.org.
