Home sales in California dip below pre-pandemic levels as the effects of rising interest rates begin to show even as prices set another record, C.A.R. reports
- Existing, single-family home sales totaled 377,790 in May on a seasonally adjusted annualized rate, down 9.8 percent from April and down 15.2 percent from May 2021.
- May’s statewide median home price was, $898,980 up 1.6% percent from April and up 9.9% percent from May 2021.
- Year-to-date statewide home sales were down 8.9 percent in May.
LOS ANGELES (June 16) – California’s housing market started showing signs of a market shift in May, as the monthly average 30-year fixed rate mortgage surpassed 5 percent for the first time since April 2010 leading to the lowest sales level since June 2020, and the largest year-over-year decline in five months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 377,790 in May, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2022 if sales maintained the May pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
May’s sales pace was down 9.8 percent on a monthly basis from 419,040 in April and down 15.2 percent from a year ago, when 445,660 homes were sold on an annualized basis. Home sales dipped below the 400,000 level for the first time since June 2020. While public health concerns and market uncertainty were the triggering factors that resulted in the sales decline two years ago, tight supply and the higher cost of borrowing were responsible for the near double-digit decline this time around.
“We’re beginning to see signs of a more balanced housing market with fewer homes selling above list price and homes remaining on the market a little longer than in previous months,” said C.A.R. President Otto Catrina, a Bay Area real estate broker and REALTOR®. “What this tells us is that there is slightly more supply, fewer- and less-intense bidding wars, and those who’ve experienced ‘buyers’ fatigue’ may now have a window of opportunity.”
California’s median home price set another record in May at $898,980 — surpassing the record set in April of $884,890. The May price was 1.6 percent higher than the April median price and 9.9 percent higher than the $818,260 recorded last May. This can largely be attributed to the mix of sales with the high-end market continuing to outperform the more affordable market segments.
The share of million-dollar home sales increased for the fourth straight month and reached the highest level on record at 35.3 percent, while home sales priced below $500,000 dipped again in May and hit the lowest level of all time.
Home prices could be leveling off though, as the monthly gain in price appears to be moderating. The month-over-month increase of 1.6 percent in the May median price was still higher but only slightly above the long run average of 1.1 percent recorded between April and May in the last 43 years.
“Pending home sales declined 30.6 percent in May – the biggest drop since the first month of the pandemic – likely due to eroding affordability, rising mortgage rates and home prices, and the increased risk of a recession,” said C.A.R. Vice President and Chief Economist Jordan Levine. “The combined effect of the aforementioned factors resulted in a record increase in the average monthly mortgage payment to a typical home by more than 40 percent in May. With the Fed expected to raise rates further in the second half of the year, the 30-year fixed rate mortgage could surge past 6 percent by year’s end and lead to more affordability challenges for potential homebuyers.”