Home sellers and real estate agent had much to be thankful for in November, as home sales increased at the fastest pace in more than three years.
The better-than-expected activity – the best since June 2021 – was a bit of good news for a still-struggling housing market. But the annual sales boost was largely because of a dismal November 2023, when sales plummeted to the lowest level since late 2007, the start of the housing crisis.
Home sales reached 267,800 in November on a seasonally adjusted annualized rate, a 1.1% bump from October – and up 19.5% compared to a year ago, according to the California Association of Realtors. The adjusted annualized rate is how many homes would sale at the current pace for a year (or about 22,300 per month).
All seven regions reported solid sales gains, including a state-best 22% increase on the Central Coast and 17% in the Central Valley, from Bakersfield to Sacramento (see table, below).
A DOSE OF REALITY WITH THE OPTIMISM
But CAR officials, an almost always optimistic group, are quick to cite that the current rate of home sales is far from the 400,000-plus homes before the COVID pandemic. Housing economists say at least 350,000 home sales are the minimum needed for a semi-healthy housing market.
“Mortgage rates continue to remain elevated, leading to the challenges for many buyers,” says CAR president Heather Ozur, a REALTOR in Palm Springs. “However, home prices are growing at a moderate pace and housing supply is increasing, indicating sone hope that the market will continue to improve next year.”
3.3
Months of home inventory on the market
26
Average days on the market before escrow
99.4
Percent of the price paid vs. the listing price
Indeed, affordability is a big concern for many home shoppers. Fewer than one of every five (16%) households could afford to buy the median priced home during the third quarter, and even fewer on the Central Coast and in Southern California.
But those able to buy are finding a lot more homes on the market. Active listings increased 27% compared to a year ago, the ninth consecutive annual sales gain, according to CAR.
‘HOUSING SENTIMENT WILL CONTINUE TO IMPROVE’
Despite higher rates, more homes available for buyers and even homes staying longer on the market, home prices increased 3.8% to $852,880 from a year ago. However, home prices dipped 4% compared to the previous month.
The rather moderate price increase is largely because of fewer higher-priced homes selling in November. Million-dollar home sales had been increasing the past several months but slowed in November.
Six of the seven regions statewide reported an increase in prices, while prices remained unchanged in the Far North, from about Chico to Crescent City. The Central Coast – Santa Barbara to Santa Cruz – was the best-performing price market with a 7.9% increase.
“Home prices are expected to moderate further in the next couple of months if they follow the seasonal trend but should continue to grow in the first quarter of 2025 before the kick-off of the spring homebuying season,” says Jordan Levine, CAR senior vice president and chief economist. “With mortgage rates expected to moderate in 2025, housing sentiment will continue to improve throughout the next 12 months, and more consumers will get off the sidelines as they acclimate further to the new market environment.”
Home prices and sales in January compared to a year ago
| Region | Median home price | % gain or loss vs. a year ago | Home sales vs. a year ago |
|---|---|---|---|
| California | $852,880 | +3.8% | +19.5% |
| Bay Area | $1.32 million | +5.3% | +14.0% |
| Central Coast | $1.03 million | +7.9% | +21.7% |
| Central Valley | $495,000 | +4.3% | +17.1% |
| Far North | $375,000 | +0.0% | +6.2% |
| Inland Empire | $600,000 | +5.7% | +5.2% |
| Los Angeles | $822,000 | +4.7% | +6.8% |
| Southern California | $850,000 | +3.1% | +2.2% |
Source: California Association of Realtors
