Residential Real Estate News
California Home Sales Dip 15 Percent Annually in December
California Realtors are reporting this week that California home sales and prices moderated in December 2022 as mortgage rates edged higher, but home sales for the entire year recorded the strongest pace since 2009, exceeding 2020's level by 7.9 percent.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 429,860 in December, according to information collected by C.A.R. The statewide annualized sales figure represents what would be the total number of homes sold during 2021 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
December's sales pace was down 5.4 percent on a monthly basis from 454,450 in November and was down 15.7 percent from a year ago, when 509,750 homes were sold on an annualized basis. Despite the sixth straight year-over-year sales decrease, for the year as a whole, annual home sales rose to a preliminary 444,520 closed escrow sales in California, up 7.9 percent from 2020's pace of 411,870.
"Despite signs of moderating in the second half of the year, California's housing market continued to outperform last year's level and remained competitive even as home prices rose at a double-digit pace -- a testament to the imbalance of high demand and not enough homes on the market for sale," said 2022 C.A.R. President Otto Catrina. "For the year as a whole, the market turned in its best performance in more than a decade, as buyers took advantage of historically low interest rates and continued to value the benefits of homeownership amid another year of the pandemic."
California home prices remained below the $800,000 benchmark for the third straight month as the seasonal slowdown continued. Despite a deceleration in growth at the end of the year, the statewide median price rose to $796,570 in December, up 1.8 percent from November's $782,480 and up 11.0 percent from the $717,930 recorded in December 2020. The double-digit annual price gain was the 17th consecutive month with more than a 10 percent increase since the summer of 2020. The annual increase was also the smallest since July 2020 as the share of high-end homes continued to moderate since July 2021. For the year as a whole, California set a new annual record median price of $786,750, improving 19.3 percent from the prior year.
"The state's housing market is expected to perform solidly this year as the economy recovers further and consumers' desire to buy remains elevated," said C.A.R. Vice President and Chief Economist Jordan Levine. "However, with COVID cases surging and inventory constraints remaining an issue, the housing market will see headwinds of ongoing high inflation, which will put pressure on the Fed to raise rates sooner than previously expected. These factors will increase the cost of borrowing and put more affordability burden on potential homebuyers who want to purchase in 2022."
Other key points from C.A.R.'s December 2021 resale housing report include:
- At the regional level, all major regions in California recorded a sales decline on a year-over-year basis by more than 10 percent in December. The San Francisco Bay Area -- which had a surge in sales of 40.2 percent in December 2020 -- had the biggest sales decline at the end of 2021, dipping -23.1 percent on an annual basis. The Central Coast also had a sizable drop of -18.7 percent in December, followed by the Far North (-17.2 percent), Southern California (-10.7 percent), and Central Valley (-10.5 percent). For the full year, all regions exceeded the prior year in sales, with the San Francisco Bay Area increasing the most by 14.6 percent. The Far North region had the smallest gain of 0.3 percent, due partly to the adverse impact of last summer's wildfires.
- All but nine counties tracked by C.A.R. experienced a year-over-year sales decrease in December, with 32 counties dipping more than 10 percent from a year ago. Marin had the biggest sales drop from last year with a decline of -51.1 percent, followed by Plumas (-40.0 percent) and Contra Costa (-30.2 percent). Counties with a sales decline decreased an average of -17.3 percent in December. Nine counties managed to improve in sales from a year ago at the year-end, with San Benito (52.3 percent) leading the pack with the biggest year-over-year increase, followed by Siskiyou (11.4 percent), Glenn (11.1 percent), and Sutter (11.1 percent).
- All major regions posted solid home price gains from a year ago, with four of them recording double-digit, year-over-year median price increases. The Far North outpaced the rest of the state with a 16.6 percent year-over year gain at the end of the year, followed by Southern California (15.4 percent), the Central Valley (13.9 percent), the San Francisco Bay Area (13.4 percent) and the Central Coast (9.1 percent). The imbalance between supply and demand, coupled with low borrowing costs, continued to push up home prices. For the year as a whole, all regions recorded an increase in their median prices of at least 14 percent from the prior year, with the San Francisco Bay Area (23.8 percent) gaining the most and the Central Coast (14.4 percent) having the smallest increase.
- All but two counties in California experienced year-over-year increases in their median prices in December. Thirty-nine of them had a double-digit gain from a year ago, with Plumas gaining the most at 37.7 percent, followed by Lassen (35.8 percent) and Santa Clara (26.5 percent). Del Norte (-15.9 percent) and Santa Barbara (-3.4 percent) were the only counties with a decline in median price from last year.
- Market competitiveness was less heated than a few months ago but remained elevated in December. While the statewide median sales-price-to-list-price ratio remained above 100 percent, December's number was the lowest level since February 2021. Nearly three-fifths of homes (58 percent) still sold above asking price in the latest monthly report but were at the lowest level in 10 months.
- California's Unsold Inventory Index (UII) fell in December to its lowest level on record since C.A.R. began tracking this figure in January 1988, as active listings fell 24.1 percent from last year. December's UII was 1.2 months and was below 1.4 months in the same month of2020. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales.
- The median number of days it took to sell a California single-family home was 12 days in December and 11 days in December 2020.
- C.A.R.'s statewide sales-price-to-list-price ratio was 101.2 percent in December 2021 and 100.1 percent in December 2020.
- The statewide average price per square foot for an existing single-family home remained elevated. December's price per square foot was $382, up from $330 in December a year ago.
- The 30-year, fixed-mortgage interest rate averaged 3.10 percent in December, up from 2.68 percent in December 2020, according to Freddie Mac. The five-year, adjustable mortgage interest rate averaged 2.43 percent, compared to 2.79 percent in December 2020.
