SHORTAGE OF HOMES, HIGHER INTEREST RATES, HAMPERING MARKET

The median sales price for an existing single-family home in San Diego hit the $1 million mark in August 2023, according to the latest home sales and price report from the California Association of Realtors (C.A.R.). 

August 2023’s median price was a 3.2 percent increase from $969,020 figure for the previous month of July 2023. A year ago, in August 2022, the median price figure was $886,250, a year-over-year difference of 12.8 percent.

August 2023 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

Statewide, in August 2023, the median price reached $859,800, its highest level in 15 months. The statewide median price reached its peak of $893,200 in May 2022.

The August 2023 median price for the state also was the largest year-over-year gain in 14 months. In July 2023, the median price for California was $832,400, a difference of 3.5 percent with August 2023. A year ago, in August 2022, the California median price was $834,740, a 3.0 percent difference with August 2023.

Meanwhile, as home prices hit high levels, home sales in California declined for the third straight month in August 2023.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 254,740 in August, 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 August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The sales pace in August 2023 was down 5.3 percent on a monthly basis from a revised 268,940 in July 2023 and down 18.9 percent from a year ago in August 2022, when a revised 314,270 homes were sold on an annualized basis. Sales of existing single-family homes in California remained below the 300,000-unit pace for the 11th month in a row. The sales pace decline on an annual basis was the 26th straight drop.

Rising mortgage rates and an ongoing shortage of homes for sale continued to hamper the California housing market resulting in a 29.2 percent decline in year-to-date statewide home sales from January to August 2023.

Meanwhile, the sales pace for existing, single-family detached homes in San Diego in August 2023 was 2.7 higher when compared with July 2023. However, August 2023 home sales were down 16.0 percent in a year-over-year comparison with August 2022.

“Despite persistently high mortgage rates and availability of homes remaining extremely tight, there’s still solid interest from prospective buyers,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR®. “The highly competitive housing market continued to provide support to home prices, with the statewide median price steadily improving since early 2023. As California housing prices continue to stabilize, buyers and sellers on the sidelines will get back into the market once interest rates begin to moderate in the fourth quarter.”

“A reacceleration of interest rates since April, combined with tight housing inventory pushed down California home sales to a seven-month low in August,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “While rates may remain elevated for a little longer, macroeconomic fundamentals are expected to soften starting in the last quarter of this year. Mortgage rates should begin to ease, albeit gradually, in the next couple months, and provide a much-needed boost to both the supply and the demand sides of the housing market.”

Other key points from C.A.R.’s August 2023 resale housing report include:

• At the regional level for Southern California, year-over-year sales declined in August 2023 by 13.9 percent. In July 2023, the figure was 14 percent.
  
  
• At the regional level for Southern California, median home prices in August 2023 increased from a year ago by 4.4 percent. In July 2023, the figure was 2.7 percent.
  
  
• Home prices continued to stabilize across the state, with 19 counties experiencing year-over-year median price decreases in August, compared to 27 counties in July and 37 in June.
  
  
• Housing supply in California continued to shrink from a year ago in August as mortgage rates remained elevated. The statewide unsold inventory index, which measures the number of months needed to sell the supply of homes on the market at the current sales rate, was at 2.4 months in August 2023, 2.5 months in July 2023 and 2.8 months in August 2022. The statewide unsold inventory index was down 14.3 percent on a year-over-year basis.

August 2023 County Unsold Inventory and Days on Market
(Regional and condo sales data not seasonally adjusted)

• In San Diego in August 2023, the inventory of available homes for sale was 1.9 months, compared to 2.0 months in July 2023 and 2.5 months in August 2022. Other unsold inventory figures in 2023 in San Diego included 2.0 months in June, 1.7 months in May, 1.9 months in April, 1.7 months in March, 2.3 months in February and 2.7 months in January. 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.
  
  
• Active listings at the state level have fallen for five months in a row in a year-over-year comparison. The year-over-year decline has exceeded 20 percent the past four months.
  
  
• Active listings in a month-over-month comparison improved slightly from July 2023 to August 2023 as fewer listings were taken off the market due to the slowdown in closed sales in August.
• The median number of days it took to sell a California single-family home was 18 days in August 2023, 16 days in July 2023 and 23 days in August 2022.
  
  
• In San Diego, the median number of days it took to sell an existing, single-family home was 13 days in August 2023, compared to 12 days in July 2023 and 18 days in August 2022. Other median-time-on-the-market figures for San Diego in 2023 include 11 days in June, 12 days in May and April, 15 days in March, 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 on a monthly basis in 2023 was at 100 percent in August, July, June, May and April, 99.1 percent in March, 97.7 percent in February and 96.5 percent in January. A year ago, in August 2022, the ratio was 98.4 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 7.07 percent in August, up from 5.22 percent in August 2022, according to C.A.R.’s calculations based on Freddie Mac’s weekly mortgage survey data.