California has become a buyer’s housing market, with an abundance of available homes, declining sales and, most important, a dip in prices.
A seasonally adjusted annualized rate of 264,260 homes sold in June, a 4% increase compared to May but down 0.3% from a year ago, according to the California Association of Realtors. Year-over-year sales have dropped three straight months, the first time since late 2023.
First-half home sales are up slightly compared to the same six-month period in 2024, and housing officials warn they could fall below the pace if activity remains sluggish in July.
‘MORE FAVORABLE FOR PROSPECTIVE BUYERS’
Active listings in June were down compared to the previous month and a year ago. Pending sales have dropped for seventh straight months, with the largest year-over-year tumble since January.
“With more properties on the market and price growth flattening, conditions have become more favorable for prospective buyers who have been waiting on the sidelines to re-enter the market and take advantage of increased negotiating power,” said CAR president Heather Ozur, a Palm Springs-area REALTOR. “While sales could remain soft at the start of the third quarter, recent improvements in housing sentiments suggest that the market could see a bounce-back in the second half of the year.”
While home prices remain rather sticky, the median price declined for the second consecutive month and dropped below the $900,000 mark for the first time since April. June’s price was $899,560, off 0.1% from June and a year ago.
The annual 0.1% dip may not grab much attention, except when compared to the historic average of a 0.8% gain in June, according to CAR.
The Far North had the largest annual decline in home prices, falling 5.9%. Home prices on the Central Coast, from Santa Barbara to Santa Cruz, were down 3.1% (see table, below).
HIGH RATES, STICKY PRICES AND LOWER SALES
Higher-than-expected mortgage rates and economic uncertainty are affecting the demand for homes and prices.
Affordability is also a concern, with fewer than one of every five households able to buy a home in California. The figure drops to the low teens in several markets in the state.
“While the California housing market has not yet fully transitioned to a buyer’s market, it is exhibiting increasing signs of being more balanced,” said CAR chief economist Jordan Levine. “Inventory levels continue to normalize, with active listings posting year-over-year gains and the time on the market has lengthened compared to the prior year, indicating a deceleration in the pace of sales activity.”
Total listings have increased more than 40% compared to a year ago, climbing close to an almost six-year high. Active listings have increased 17 straight months, perhaps the best evidence of a fast-changing market.
“Sellers are demonstrating greater willingness to negotiate on pricing, concessions and other terms, which creates more advantageous conditions for those considering a home purchase,” Levine said.
Sounds like a buyer’s market.
Home prices and sales in June compared to a year ago
| Region | Median home price | % gain or loss vs. a year ago | Home sales vs. a year ago |
|---|---|---|---|
| California | $899,560 | -0.1% | -0.3% |
| Bay Area | $1.4 million | No change | +1.0% |
| Central Coast | $1.04 million | -3.1% | +11.4% |
| Central Valley | $499,000 | -0.8% | -0.8% |
| Far North | $385,000 | -5.9% | +13.7% |
| Inland Empire | $605,000 | +0.8% | +3.5% |
| Los Angeles | $847,970 | +1.6% | +2.2% |
| Southern California | $876,840 | +0.2% | +1.9% |
Source: California Association of Realtors
