A surge in mortgage interest rates and a shortage of homes for sale is suppressing the California housing market, according to the April 2023 home sales and price report from the California Association of REALTORS® (C.A.R.).
For April 2023 in San Diego, home sales were lower and home prices were higher in month-over-month comparisons between April 2023 and March 2023.
Sales of existing, single-family homes in San Diego County decreased in April 2023 by 8.2 percent in a month-over-month comparison with March 2023, and 36.9 percent in a year-over-year comparison with April 2022.
April 2023 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)
Meanwhile, the median sales price for an existing, single-family detached home in San Diego County increased in April 2023 to $930,000, compared to $915,000 in March 2023, a 1.6 percent difference. In a year-over-year comparison, the median price was $975,000 in April 2022, a 4.6 percent difference.
Statewide, the sales pace for existing, single-family homes was down 4.7 percent in April 2023, compared to March 2023, and down 36.1 percent from April 2022.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 267,880 in April 2023, 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 April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
April’s sales pace of 267,880 homes sold in April 2023 was down from 281,050 homes sold in March 2023 and down from a year ago in April 2022, when a revised 418,970 homes were sold on an annualized basis.
Sales of existing single-family homes in California remained below the 300,000-unit level for the seventh consecutive month.
Year-to-date statewide home sales were down 37.4 percent in April 2023.
Also statewide, the median home price in April 2023 increased by 3.0 percent to $815, 340, compared to $791,490 in March 2023.
It was the first time in six months, since October 2022, that California’s median home price surprised the $800,000 level.
Despite the price improvement since early this year, April’s median price was lower on a year-over-year basis for the sixth consecutive month, declining 7.8 percent from the revised $884,680 recorded a year ago in April 2022.
The sizable drop in median price from last year was due partly to the strong price surge in early 2022 when homebuyers rushed into the market to take advantage of low rates before the Federal Reserve began aggressively raising rates.
“While home sales declined in April, the market is getting more competitive as we’re seeing time on the market before selling down to 20 days in April from 33 days in January and the share of homes sold above asking price double from one in five at the beginning of the year to more than two in five in April,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR®. “This increase in market competition continued to provide support to the statewide median home price in April, which climbed above $800,000 for the first time in six months.”
“Home sales remained soft as the lock-in effect continued to tighten housing supply and keep would-be sellers from listing their homes for sale, which contributed to a 30 percent year-over-year drop in new statewide active listings, the largest drop since May 2020 when the pandemic shutdown took place,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “A surge in borrowing costs as mortgage rates surpassed 7% in late February and early March also contributed to the market weakness, as many transactions that opened in those two months were closed in April.”
Looking ahead, C.A.R. has revised its 2023 Housing Market Forecast and projects existing single-family home sales to reach 279,900 units in 2023, a decline of 18.2 percent from the 342,000 units sold in 2022. While home prices in general are expected to improve in the second half of the year, the California median home price is projected to decrease 5.6 percent to $776,600 in 2023, down from the annual median price of $822,300 recorded in 2022. C.A.R. also expects the 30-year fixed mortgage interest rate will average 6.3 percent for the year.
Other key points from C.A.R.’s April 2023 resale housing report include:
-- At the regional level, all major regions recorded year-over-year sales declines in April 2023. Southern California declined 37.4 percent from April 2022.
-- At the regional level, median home prices dropped from a year ago in all major regions. Southern California home prices declined by 6.2 percent in April 2023.
-- Housing inventory in California bounced back after dipping month-over-month for two straight months. The statewide unsold inventory index in April 2023 also increased from last year, jumping 38.9 percent on a year-over-year basis. The surge in the inventory continued primarily due to low housing demand as existing home sales remained below the 300,000 benchmark.
-- Housing inventory increased by at least 20 percent in all price ranges in April 2023, compared to April 2022. Homes priced at $1 million and higher gained the most in unsold inventory with a 64.7 percent increase, followed by the $500,000-$749,000 price range (33.3 percent), the $750,000-$999,000 price range (21.1 percent), and the sub-$500,000 price range (26.3 percent).
April 2023 County Unsold Inventory and Days on Market
(Regional and condo sales data not seasonally adjusted)
-- The statewide unsold inventory index on a monthly basis increased to 2.5 months in April 2023, compared to 2.2 months in March 2023 and 1.8 months in April 2022.
-- In San Diego, in April 2023, the inventory of available homes for sale was 1.9 months, compared to 1.7 months in March 2023, 2.3 months in February 2023, 2.7 months in January 2023, and 1.6 months in April 2022. Inventory levels indicate the number of months it would take for the available supply of homes on the market to sell out given the current rate of sales.
-- The median number of days it took to sell a California single-family home was 20 days in April 2023, 24 days in March 2023, and 11 days in April 2022.
-- In San Diego, the median number of days it took to sell an existing, single-family home was 12 days in April 2023, compared to 15 days in March 2023 and eight days in April 2022. Other median-time-on-the-market figures in San Diego in 2023 include 17 days in February and 26 days in January. The median represents a time when half the homes sell above it and half below it.
The statewide, sales-price-to-list-price ratio was at 100 percent in April 2023, compared to 99.1 percent in March 2023, 97.7 percent in February 2023 and 96.5 percent in January 2023. A year ago, in April 2022, the ratio was 104.2 percent. The sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage. A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.
-- The 30-year, fixed-mortgage interest rate averaged 6.34 percent in April, up from 4.98 percent in April 2022, according to Freddie Mac.