A sign is posted in front of a home for sale in San Francisco on May 11, 2023. (Justin Sullivan/Getty Images)
California home sales hit a 16-year low in November, the lowest since the Great Recession, according to the California Association of Realtors.
According to a Dec. 19 press release from the association, the 223,940 single-family homes sold statewide last month was a 25.9 percent drop since the start of the year, a 7.4 percent decline compared to October, and a 5.8 percent drop versus November 2022.
Association President Melanie Barker said the low sales were due to high interest rates—around 7.44 percent for a 30-year-fixed mortgage—and a lack of inventory.
But she said recent drops in rates plus speculation the Federal Reserve may cut rates next year could lead to more home sales in 2024.
“With mortgage rates dropping to the lowest level in four months in recent weeks and the Federal Reserve indicating it plans to cut rates more than previously anticipated in 2024, more prospective homebuyers could reenter the market early next year,” she said in a statement.
While home sales are falling, prices have continued to increase. The median home price in California was $774,150 last November but has now jumped to $822,200.
Regionally, home sales in the Central Valley and Central Coast regions were down in November 14.4 percent and 10.4 percent, respectively. The next largest declines were in the San Francisco Bay Area falling 6.2 percent; Southern California, down 5.6 percent; and the Far North region—10 sparsely populated counties in California’s far north—down 5.5 percent.
According to the association’s Senior Vice President and Chief Economist Jordan Levine, limited inventory has kept home prices inflated leading to fewer sales.
“While sales have been weak for the past several months, a tight supply of homes for sale is keeping home prices from falling,” he said in a statement
He added that declining mortgage rates and rising home prices in some areas could suggest more homeowners looking to sell soon, which could help inventory and increase sales in the new year.
“Going into 2024, the recent decline in mortgage rates, along with the upward momentum in home prices, could motivate more would-be sellers to list their homes for sale in the spring homebuying season,” he said.
On the county level, more than half of 52 counties tracked by the association had a decline in sales in November compared to last year, with the largest drops in Calaveras, Butte, and Mendocino counties with each dropping by about 32 to 33 percent.
The association also noted that of the 15 counties that saw increased home sales, San Benito—east of Monterey—had the largest increase at 68.4 percent compared to last year, followed by Mono County—just east of Yosemite National Park—at 66.7 percent and Lassen County with a 30 percent jump.
Additionally, according to the association, 34 of 52 counties had an increase in home prices in November compared to the same time last year. Orange County had the highest increase of 18.2 percent, with median home prices jumping from $1.1 million last year at this time to $1.3 million this November. San Benito had the second highest jump of about 17.2 percent, whereas Los Angeles increased by 7.3 percent and San Francisco, 2.3 percent.
The association said nearly two-thirds of all counties also had fewer active listings in November compared to the year prior, with 23 showing decreases by more than 10 percent, adding to fewer sales.