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A chill in the air? Home sales dip, prices fall below $800,000

Home sales have dropped four consecutive months and the median price fell below $800,000 for the first time in seven months.

Tale of two states: Median price of $2.1 million in Mateo County, $233,000 in Lassen 

Estimated reading time: 3 minutes

California’s red-hot housing market cooled with the arrival of fall, possibly bringing some holiday cheer for would-be buyers that have endured bidding wars and huge price gains during the past 18 months.

October’s annualized home sales dipped to 434,170, down 0.9% from September but off 10.4% from a year ago, according to the California Association of Realtors. Annualized sales would be the total number of homes sold if the pace was maintained throughout the year.

Despite the fourth straight month of year-over-year sales declines — you can hear wanna-be buyers cheering and home sellers starting to worry — home sales are up 13.4% for the first 10 months of the year compared to the same period a year ago.

All seven regions reported sales declines from a year ago, including a 23.4% drop in the Far North, from about Chico to Redding. Bidding wars and competition for homes eased in October, with three of every five homes selling for above the asking price — the lowest level since February (see chart below for more information).    

“As the housing market moves from frenzied to less frenzied and price growth comes back to earth, fewer homes are selling above asking price and bidding wars are less prevalent,” says CAR president Otto Catrina. “So, more buyers who pushed pause earlier this year will be able to take advantage of still-cheap financing,”

‘Market normalization’

Wanna-be buyers will benefit from near-record-low mortgage rates, though they have increased in the past several weeks, and slightly lower home prices. However, affordability is far from good; only one of every four households could buy during the third quarter, according to CAR.

The state’s median home price — meaning half the homes sold for more, the other half for less — dropped below $800,0000 for the first time in seven months in October. The current median price of $798,400 is down 1.3% from September but up 12.3% from a year ago. The Inland Empire had the biggest increase at 18% from a year ago.

The Bay Area is the most expensive housing market, with a median price of $1.28 million — and five counties exceed that level, including $2.1 million in San Mateo County. The Far North was the most affordable market at $370,000, including $232,500 in Lassen County — the lowest price in the state.

“Despite a slowdown in sales from last year’s robust fall season, the California housing market continues to stabilize and is outperforming the pre-pandemic levels observed in 2017, 2018 and 2019,” says Jordan Levine, CAR vice president and chief economist. “Slower sales activity suggests that the market is returning to its typical seasonal pattern and further market normalization can be expected in the coming months.”

CALIFORNIA HOME PRICES, SALES COMPARED TO A YEAR AGO (RANKED BY PRICE)
RegionPrice% Gain/LossSales
Bay Area$1.28 million+15.9%-7.3%
Central Coast$865,420+1.8%-18.2%
Southern California$750,000+15.9%-11.9%
Los Angeles$725,000+14.6%-12.7%
Inland Empire$525,000+18.0%-15.2%
Central Valley$450,000+13.9%-9.1%
Far North$370,000+7.6%-23.4%
Source: California Association of Realtors
Ron Trujillo

Ron Trujillo

Longtime business journalist-turned-communications executive who enjoys reporting on residential real estate in his spare time.

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