March madness: Home prices surge to a record, sales slow with higher rates
Estimated reading time: 5 minutes
One of every three homes sold in California topped $1 million in the first month of spring
Homebuyers played beat-the-higher mortgage rates and created some March madness, lifting home prices to a record of almost $850,000 – and sending a clear message that the hot housing market is far from cooling down.
An adjusted annualized rate of 426,970 homes sold in March, a 0.5% increase compared to February – and off 4.4% from a year ago, according to the California Association of Realtors.
The slight decline comes as more homes were available for sale, with active listings at the highest level in five months.
“With homes still selling at a rapid clip and more homes selling above asking price than last summer when prices were at record highs, California housing market continues to perform remarkably well as buyers enter the market to get ahead of rising mortgage interest rates,” says CAR President Otto Catrina, a Bay Area real estate broker. “An increase in active listings for the first time since prior to the pandemic should give consumers more options and alleviate some of the upward pressure on home prices, which bodes well for prospective buyers.”
WILL HIGHER RATES LEAD TO FEWER SALES?
Maybe, if buyers can afford the home with fast-rising mortgage rates.
Thirty-year, fixed-rate mortgage rates increased for the seventh-consecutive week, reaching 5.11% on Thursday (April 21), about 1 percentage point higher than a month ago – and up from 2.97% for the comparable period in April 2021, according to Freddie Mac.
“While springtime is typically the busiest homebuying season, the upswing in rates has caused some volatility in demand,” says Sam Khater, chief economist for Freddie Mac. “It continues to be a seller’s market, but buyers who remain interested in purchasing a home may find that competition has moderately softened.”
But prices – and affordability, especially with higher mortgage rates – will be a huge hurdle for homebuyers. One of every four consumers could afford to buy a home during the fourth quarter in California, and that percentage has likely plummeted with the much-higher mortgage rates.
The state’s median home price – meaning half the homes sold for more, the other half for less – reached a record $849,080 in March, a 10.1% increase from February and up 11.9% from a year ago, according to CAR. The month-to-month increase was the largest percentage increase in nine years.
rates matter, a lot
The monthly mortgage payment has greatly increased during the past year.
At the current median home price with a 20% down payment, the monthly mortgage rate has climbed from $2,856 when rates were 2.97% a year ago to $3,696 today at 5.11%. That’s a hefty $840 jump per month.
So, the cost in mortgage payments will increase about $10,100 over a year – or $302,000 for the life of the 30-year mortgage.
(The figure does not include property taxes and insurance.)
But prices – and affordability, especially with higher mortgage rates – will be a huge hurdle for homebuyers. One of every four consumers could afford to buy a home during the fourth quarter in California, and that percentage has likely plummeted with the much-higher mortgage rates.
The state’s median home price – meaning half the homes sold for more, the other half for less – reached a record $849,080 in March, a 10.1% increase from February and up 11.9% from a year ago, according to CAR. The month-to-month increase was the largest percentage increase in nine years.
MILLION-DOLLAR MADNESS
Blame high-end homes for the record-setting price increase. The share of million-dollar homes sold jumped for the second straight month to a record 32.9% in March. Basically, one of every three homes that sold in March was for a million dollars or more in the state.
More than 70% of homes sold in the Bay Area topped $1 million in March. And two Bay Area counties – San Mateo and San Francisco – had median home prices of $2.28 million and $2.06 million, respectively. Orange County’s median home price climbed to $1.3 million in March, a 27.3% increase from a year ago. Forty-five of the 83 ZIP codes in Orange County have prices of $1 million-plus, according to CoreLogic.
“March sales data continues to suggest strong buying interest and a solid housing market, as the effects of higher mortgage interest rates won’t be realized for a few more months,” says Jordan Levine, CAR vice president and chief economist. “With the Federal Reserve expected to announce two back-to-back half-point interest rate hikes in May and June to combat inflation, interest rates will be elevated for the foreseeable future, adversely affecting housing demand and lowering housing affordability in the coming months. But the effects may not be visible until the second half of the year as many homes that are, or will be, closings were negotiated before the sharp increase in rates.”

However, many real estate agents are already reporting fewer buyers making offers for each home and less traffic at open houses. But the booming demand coupled with far-too-few homes listed will likely continue the seller’s market for some time, real estate experts say.
CALIFORNIA HOME PRICES, SALES IN MARCH COMPARED TO A YEAR AGO (RANKED BY PRICE)
Region | Price | % Gain/Loss | Sales |
---|---|---|---|
Bay Area | $1.44 million | +17.9% | -2.7% |
Central Coast | $1.05 million | +20.4% | -20.1% |
Southern California | $802,500 | +13.8% | -7.5% |
Los Angeles | $770,000 | +13.2% | -8.7% |
Inland Empire | $580,000 | +17.2% | -8.2% |
Central Valley | $495,000 | +19.3% | +2.8% |
Far North | $395,000 | +12.9% | -7.7% |

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