California home sales and prices eased in December as the state’s housing market posted its best performance in more than a decade, according to the latest home sales and price report from the California Association of REALTORS® (C.A.R.).
The number of closed escrow sales of existing, single-family detached homes statewide on a seasonally adjusted annualized rate was down 5.4 percent in December 2021 to 429,860, compared to 454,450 in November 2021. The December 2021 sales pace was down 15.7 percent from a year ago in December 2020, when 509,750 homes were sold on an annualized basis.
The statewide annualized sales figure, collected from more than 90 local REALTOR® associations and MLSs statewide, represents what would be the total number of homes sold during 2021 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
Despite the sixth straight month for a year-over-year sales decrease for the year as a whole, sales of existing statewide homes maintained a 7.9 percent increase from 2020’s pace on a year-over-year basis.
In San Diego, home sales in December 2021 were lower in month-over-month and year-over-year comparisons. San Diego home sales in December 2021 declined 0.8 percent, compared to November 2021, and were 11.2 percent lower than December 2020.
December 2021 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)
Meanwhile, the California median home price dipped below the $800,000 benchmark for the third straight month as the seasonal slowdown continued. Despite a deceleration in growth at the end of the year, the statewide median price rose to $796,570 in December, up 1.8 percent from November’s $782,480 and up 11.0 percent from the $717,930 recorded in December 2020.
The double-digit annual price gain was the 17th consecutive month with more than a 10 percent increase since the summer of 2020. The annual increase was also the smallest since July 2020 as the share of high-end homes continued to moderate since July 2021. For the year as a whole, California set a new annual record median price of $786,750, improving 19.3 percent from the prior year.
In San Diego, the median sales price for an existing, single-family detached home in San Diego County was $836,700 in December 2021, a drop of 1.3 percent compared to the $847,750 price in November 2021. The December median price was 14.6 percent higher than a year ago at $730,000 in December 2020, roughly a $100,000 increase in one year.
“Despite signs of moderating in the second half of the year, California’s housing market continued to outperform last year’s level and remained competitive even as home prices rose at a double-digit pace — a testament to the imbalance of high demand and not enough homes on the market for sale,” said 2022 C.A.R. President Otto Catrina, a Bay Area real estate broker and REALTOR®. “For the year as a whole, the market turned in its best performance in more than a decade, as buyers took advantage of historically low-interest rates and continued to value the benefits of homeownership amid another year of the pandemic.”
“The state’s housing market is expected to perform solidly this year as the economy recovers further and consumers’ desire to buy remains elevated,” said C.A.R. Vice President and Chief Economist Jordan Levine. “However, with COVID cases surging and inventory constraints remaining an issue, the housing market will see headwinds of ongoing high inflation, which will put pressure on the Fed to raise rates sooner than previously expected. These factors will increase the cost of borrowing and put more affordability burden on potential homebuyers who want to purchase in 2022.”
Other key points from C.A.R.’s December 2021 resale housing report include:
-- At the regional level, all major regions in California recorded a sale decline on a year-over-year basis by more than 10 percent in December 2021. The sales decline for Southern California at the end of 2021 was 10.7 percent on an annual basis.
-- All major regions posted solid home price gains from a year ago, with four of them recording double-digit, year-over-year median price increases. The Far North outpaced the rest of the state with a 16.6 percent year-over-year gain at the end of the year, followed by Southern California (15.4 percent), the Central Valley (13.9 percent), the San Francisco Bay Area (13.4 percent), and the Central Coast (9.1 percent).
-- Market competitiveness was less heated than a few months ago but remained elevated in December. Nearly three-fifths of homes (58 percent) sold above the asking price, but that was the lowest level in 10 months. December was the 15th consecutive month since September 2020 that more than half of the homes sold above the asking price.
-- While the statewide median sales-price-to-list-price ratio remained above 100 percent, the December number was the lowest level since February 2021. The sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and sellers under current market conditions. The ratio, expressed as a percentage, is calculated by dividing the final sales price of a property by its last list price. A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, while a ratio below 100 percent indicates that the price sold below the asking price.
-- The inventory of available homes for sale in San Diego County in December 2021 was 1 month, compared to 1.3 months in November 2021 and 1.2 months a year ago in December 2020. Numbers from previous months in 2021 included: October, 1.5; September, 1.6; August, 1.7; July, 1.7.
-- Statewide, the unsold inventory of homes was 1.2 months in December 2021, compared to 1.6 months in November 2021 and 1.4 months in December 2020. The December 2021 figure of 1.2 months was the lowest level on record since CAR began tracking this figure in July 1988. Active listings statewide were down 24.1 percent from last year. 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.
December 2021 County Unsold Inventory and Days on Market
(Regional and condo sales data not seasonally adjusted)
-- The median number of days it took to sell an existing, single-family home in San Diego County in December 2021 was eight days, compared to nine days in November, October, and September 2021. The eight-day timeframe compares to eight days in August, seven days in July, six days in June 2021, seven days in May 2021, and six days in April 2021. A year ago in December 2020, the number was eight days. The median represents a time when half the homes sell above it and half below it.
-- Statewide, the median number of days it took to sell a California single-family home in December 2021 was at 12 days, compared to 11 days in November and October and 10 days in September 2021. A year ago, in December 2020, the number was 11 days.
-- The 30-year, fixed-mortgage interest rate averaged 3.10 percent in December, up from 2.68 percent in December 2020, according to Freddie Mac. The five-year, adjustable mortgage interest rate averaged 2.43 percent, compared to 2.79 percent in December 2020.