HOME SALES MUTED, INVENTORY TIGHT, RATES HIGH

Home sales remained muted in October 2023, as housing inventory continued to be tight and elevated interest rates kept homebuyers and sellers on the sidelines, according to the latest home sales and price report from the California Association of Realtors (C.A.R.). 

In San Diego County, sales of existing, single-family homes in October 2023 increased 5.7 percent in a month-over-month comparison with September 2023, while the sales pace was 6.4 percent lower in a year-over-year comparison with October 2022.

Also in San Diego County, the median home sales price for an existing, single-family detached home in October 2023 was $936,250, which was a 3.8 percent dip from September 2023, when the price was $973,100. In addition, the median home sales price a year ago in October 2022 was $860,000, a 8.9 percent difference with October 2023.

Statewide, the numbers for home sales and home prices in October 2023 revealed a similar narrative.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 241,770 homes sold in October 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 October 2023 pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The statewide sales pace in October 2023 was up 0.3 percent on a monthly basis compared to September 2023, when 240,940 homes were sold, and down 11.9 percent from a year ago in October 2022, when 274,410 homes were sold on an annualized basis.

Sales of existing single-family homes in California remained below the 250,000-unit pace for the second consecutive month. The annual decline was the 28th straight drop, but the decline was the smallest in the last four months.

Year-to-date statewide home sales were down 27.2 percent in October 2023.

Home prices on a statewide basis rose for the fourth straight month in a year-over-year comparison, and the median price was the largest year-over-year gain in 17 months.

Statewide, in October 2023, the median price was $840,360, which was 0.4 percent lower than the September 2023 figure of $843,340, and 5.3 percent lower than the revised October 2022 figure of $798,140. The median represents a price where half of the total number of homes sold above it and half below.

While October’s median price took a step back from the month prior, the month-to-month decline was smaller than the long-run September-to-October price adjustment of -1.5 percent observed in the last 44 years.

Prices are expected to level off over the next couple of months, following traditional seasonal patterns. Positive year-over-year price growth should remain throughout the rest of the year as housing supply is projected to be tight in the coming months.

“A sizable jump in interest rates kept home sales constrained in October and will likely hamper home sales for the remainder of the year,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR®. “Despite rates remaining elevated, many other factors have swung in favor of buyers recently including more properties staying on the market longer before selling and fewer homes selling over list price, which could motivate more sellers to offer concessions.”

“With the Federal Reserve pausing rate hikes at the last Federal Open Market Committee meeting and recent economic news pointing to a slowing economy, mortgage rates have been coming down in recent weeks,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “If inflation continues to cool, we could see more improvement in mortgage rates than the Fed is currently projecting for next year, which would alleviate some pressure on both the buy and sell sides of the housing market in 2024.”

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

• At the regional level for Southern California, year-over-year sales declined in October 2023 by 7.4 percent. In September, the figure was 21.7 percent. In August 2023, the figure was 13.9 percent.
  
  
• At the regional level for Southern California, median home prices in October increased from a year ago by 6.5 percent. In September the figure was 4.7 percent. In August, the figure was 4.4 percent.
  
  

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

• Housing supply in California continued to shrink from a year ago in October 2023 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 2.7 months in October 2023, 2.8 months in September 2023, and 3.1 months in October 2022.
  
  
• In San Diego in October 2023, the inventory of available homes for sale was 2.3 months, compared to 2.5 months in September and 3.0 months in October 2022. Other unsold inventory figures on a monthly basis in 2023 in San Diego included 1.9 months in August, 2.0 months in July, 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.

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

• Housing inventory in California slid back in October from the prior month as the market continued to grapple with high mortgage rates. The statewide unsold inventory index decreased -3.6 percent on a month-over-month basis and fell below last October by -12.9 percent.
  
  
• Active listings at the state level continued to dip on a year-over year basis for seven straight months, and a further decline in each of the last six months all registered more than 20 percent in year-over-year comparisons.
  
  
• New active listings at the state level dropped from a year ago for the 16th consecutive month, but the rate of decline continued to decelerate. In fact, newly added for-sale properties dipped less than 10 percent for the first time in 12 months. The smaller year-over-year rate of decline was partly due to low-base effects though, as new active listings in October 2022 also recorded a sizeable drop from the prior year. 
  
  
• The median number of days it took to sell a California single-family home was 20 days in October and 28 days in October 2022.
  
  
• In San Diego, the median number of days it took to sell an existing, single-family home was 14 days in October and September 2023, compared to 22 days in October 2022.Other median-time-on-the-market figures on a monthly basis for San Diego in 2023 include 13 days in August, 12 days in July, 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 October, September, 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 October 2022, the ratio was 97.3 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 7.62 percent in October, up from 6.90 percent in October 2022, according to C.A.R.’s calculations based on Freddie Mac’s weekly mortgage survey data.
  
  
• Mortgage rates have been coming down in recent weeks as the Fed paused rate hikes at the latest meeting and recent economic news pointed to a slowing economy. Further decline in mortgage rates should alleviate pressures on both the supply side and the demand side of the housing market in the coming months.