California's spring home-buying season starts out cold in March

California home sales continued to sputter in March, as higher mortgage rates sidelined buyers and stopped many would-be sellers.

But a bitterly cold winter is showing signs of a slightly warmer spring, real estate and mortgage officials say.

“The competitiveness in the housing market continues to heat up, as homes are selling faster and the sales-to-list price ratio is improving, all the while when the number of homes available for sale continues to tighten,” says CAR president Jennifer Branchini, a Bay Area Realtor. “All signs point to a market with solid demand, which should help bolster sales through the homebuying season.”

A HOUSING MARKET BOUNCE THIS SPRING?

Perhaps, but the key remains the limited supply. It’s hard to sell what you don’t have – or have very little of. New listings plummeted 30% in March compared to a year ago, the largest drop since May 2020, considered the peak of the pandemic shutdown, according to the California Association of Realtors.

The limited supply has significantly stalled sales during the past year.

Home sales dipped 1% to a seasonally adjusted annualized rate of 281,050 in March compared to February – and off a staggering 34% from a year ago. Sales were below the 300,000-home threshold for the sixth straight month, evidence of a still-struggling market.

The Inland Empire – Riverside and San Bernardino counties – had a 40% drop in sales from a year ago, the largest in the state. And six of the seven regions had a 30%-plus decline, with the Central Valley faring the best with a 28% drop from a year ago.

FEW AVAILABLE HOMES ARE HELPING HOME PRICES

The biggest challenge remains a lack of homes on the market, an all-too-familiar concern from home shoppers, real estate agents and mortgage brokers.

Few available homes are bad for buyers but good for sellers, especially when it comes to prices. The state’s median-home price – meaning half the homes sold for more, the other half for less – increased for the first time in seven months, but off 7% from a year ago.

California’s median home price climbed to $791,490 in March, a 7.6% increase from February. But home prices were lower on a year-over-year basis for the fifth straight month.

The Bay Area had the biggest decline at almost 13% from a year ago, followed by the Central Coast at 12% (see table). However, home prices also reached their peak in spring 2022, before The Federal Reserve started increasing interest rates to cool the red-hot housing market.

“While home sales continue to hover below the 300,000-unit annualized pace, the market seems to have weathered more aggressive rate hikes and banking failures quite well in the last few weeks,” says Jordan Levine, vice president and chief economist for CAR. “If interest rates stabilize or even improve in the next couple of months, home sales should rise during the spring home-buying season, but tight inventory will prevent a rapid rebound.”

So, home sales may improve, but don’t expect bidding wars and fast-rising prices soon, especially as home shoppers and homeowners cautiously watch mortgage rates and prices.

Home prices in March vs. a year ago

Region	Price	% Gain/Loss
California	$791,490	-7.0%
Bay Area	$1.23 million	-12.8%
Central Coast	$922,500	-12.1%
Southern California	$770,000	-4.0%
Los Angeles	$735,000	-4.5%
Inland Empire	$555,000	-4.3%
Central Valley	$453,550	-8.4%
Far North	$355,000	-10.1%