California’s February Home Sales Show Resilience Amid Rising Interest Rates

California’s February Home Sales Show Resilience Amid Rising Interest Rates

A subdivision is built in San Marcos, Calif., on Jan. 31, 2023. (Mike Blake/Reuters)

Sophie Li

Sophie Li

3/26/2024

Updated: 3/26/2024

Home sales in California climbed 12.8 percent in February despite rising mortgage interest rates, the California Association of Realtors (CAR) reported March 19.
According to CAR, single-family home sales surpassed 290,000 in February, up from a little over 257,000 in January. The increase marked the second consecutive month of double-digit growth in home sales, following a nearly 15 percent surge in January.
Both supply and demand surged last month, signaling a heating up of the overall market as the spring homebuying season approached, the association said.
“Housing supply conditions in California continued to improve in February with new active listings rising more than 10 percent for the second straight month,” said CAR President Melanie Barker in a statement. “This is great news for buyers who have been competing for a dearth of homes for sale.”
Forty California counties saw an increase in sales compared to the same time last year, according to CAR.
However, sales decreased in 12 of the 53 counties tracked by CAR compared to the previous year, with Butte County, located north of Sacramento, and San Joaquin County, the northernmost county in the Central Valley, experiencing drops of over 10 percent year-over-year, and Sutter County, situated in the north central area of the state, seeing a decline of more than 20 percent, CAR reported.
As of February, the 30-year fixed mortgage averaged 6.78 percent, continuing its steady increase since the start of the year when it was 6.64 percent, according to CAR. However, experts said a dip in mortgage rates toward the end of 2023 and at the new year likely contributed to the increase in home sales.
“Home sales are actually increasing throughout the United States, and it has a lot to do with lower interest rates at the beginning of the year,” Oscar Wei, CAR’s deputy chief economist, told KTLA 5 News.
Interest rates reached a peak of approximately 8 percent in October 2023 before gradually declining as inflation eased, Mr. Wei said.
Median home prices have also increased statewide, both compared to January and on a year-over-year basis.
In February, the median price statewide reached $806,490, a 2.2 percent increase from January and up 9.7 percent from the same time last year.
Regionally, all major areas saw an increase in February compared to February 2023.
The San Francisco Bay Area continued to have the highest median price at $1.256 million, a 14.2 percent surge from January and up 14.9 percent from the same time last year.
The Central Coast had a median price of $950,000, a 2.6 percent uptick from January and up 18.7 percent compared to February 2023—the most substantial year-over-year increase among all the regions.
Southern California took the third spot at $825,000, a 5 percent increase from January and up 7 percent from February 2023.
Orange County boasted the highest price in the southland, with a median price of $1.35 million, reflecting a 2.3 percent increase from January and a 12.4 percent rise over the same time last year. Following behind is San Diego County, with a median price of $980,000, up 5.9 percent over January and 8.1 from the same time in 2023.
San Mateo County recorded the highest statewide median home price in February at $1.92 million but was down 7.6 percent year over year.
“Consumers have been feeling more positive about buying and selling since the beginning of the year, as increases in sales activity and home prices are reflected in the latest improvement in optimism,” said CAR Senior Vice President and Chief Economist Jordan Levine.
Although the increase in sales might slow down in March as interest rates have risen Mr. Levine said he continued to feel positive about the market.
“While the recent upward movement in interest rates may result in more moderate sales in March, we expect homebuyers on the sidelines to reenter the market as the economy slows and rates begin to trend down again in the second quarter,” he said.
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Sophie Li

Sophie Li

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Sophie Li is a Southern California-based reporter covering local daily news, state policies, and breaking news for The Epoch Times. Besides writing, she is also passionate about reading, photography, and tennis.

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