June Market Recap: California’s housing market faces challenges with elevated interest rates and limited listings, impacting home sales for the ninth month in a row.
Elevated Interest Rates and Limited New Listings Impact California Home Sales
California’s housing market faced challenges in June as interest rates remained high and the number of available homes for sale stayed limited. This situation, reported by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.), marked the ninth consecutive month with home sales below the 300,000 annualized pace.
Sales Figures Show a Dip in Activity
In June, the closed escrow sales of existing, single-family detached homes in California reached a seasonally adjusted annualized rate of $277,490, representing a decline of 4.1 percent from May and a substantial 19.7 percent drop from June 2022.
Steady Median Home Prices Amidst Challenges
Despite the hurdles, California’s median home price remained above $800,000 for the third consecutive month. In June, the median price reached $838,260, showing a slight increase of 0.3 percent compared to May but down 2.4 percent from June 2022.
Housing Market’s Resilience and Future Outlook
The market has shown signs of stabilization after experiencing a slow decline in sales. Jennifer Branchini, C.A.R. President, noted that the demand for homes continues to outpace availability even with elevated interest rates. The housing market is gradually adapting to the current conditions.
Expectations for the Coming Months
Median home prices are predicted to dip further in the coming months as interest rates will likely remain elevated during the third quarter of 2023. However, experts believe that the market may improve with more favorable supply conditions as inflation subsides later in the year.
Regional Trends and County-Specific Data
Sales declines have been moderating across most regions, with the Far North experiencing the most significant dip at -26.1 percent compared to last year. Out of the 51 counties tracked, all but seven saw annual sales declines, with Mendocino and Napa facing the most significant sales drop in June.
Housing Inventory and Affordability
California’s housing inventory has been tight, with the unsold inventory index declining by 8.3 percent from the previous year. Nearly 80 percent of counties experienced a decrease in active listings, indicating ongoing affordability challenges in the market.
Keep an Eye on the Market
As California’s housing market continues to navigate through interest rate fluctuations and supply limitations, potential homebuyers and sellers should closely monitor market developments to make informed decisions. With rates expected to remain high soon, buyers may need to be patient while supply conditions may gradually improve later in the year.