According to the California Association of Realtors, a surge in mortgage interest rates suppressed California home sales in April 2023, while the statewide median home price climbed above the $800,000 level for the first time in six months.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 267,880 in April, according to information collected by C.A.R. The statewide annualized sales figure represents what would be the total number of homes sold during 2023 if sales maintained the April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
April's sales pace was down 4.7 percent on a monthly basis from 281,050 in March and down 36.1 percent from a year ago, when a revised 418,970 homes were sold on an annualized basis. Sales of existing single-family homes in California remained below the 300,000-unit pace for the seventh consecutive month.
"While home sales declined in April, the market is getting more competitive as we're seeing time on the market before selling down to 20 days in April from 33 days in January and the share of homes sold above asking price double from one in five at the beginning of the year to more than two in five in April," said C.A.R. President Jennifer Branchini. "This increase in market competition continued to provide support to the statewide median home price in April, which climbed above $800,000 for the first time in six months."
California's median home price surpassed $800,000 in April for the first time since October 2022, increasing 3.0 percent from March's $791,490 to $815,340. Despite the price improvement since early this year, April's median price was lower on a year-over-year basis for the sixth consecutive month, declining 7.8 percent from the revised $884,680 recorded last April. The sizable drop in median price from last year was due partly to the strong price surge in early 2022 when homebuyers rushed into the market to take advantage of low rates before the Fed began aggressively raising rates.
"Home sales remained soft as the lock-in effect continued to tighten housing supply and keep would-be sellers from listing their homes for sale, which contributed to a 30 percent year-over-year drop in new statewide active listings ― the largest drop since May 2020 when the pandemic shutdown took place," said C.A.R. Senior Vice President and Chief Economist Jordan Levine. "A surge in borrowing costs as mortgage rates surpassed 7% in late February and early March also contributed to the market weakness, as many transactions that opened in those two months were closed in April."
As such, C.A.R. has revised its 2023 Housing Market Forecast and projects existing single-family home sales to reach 279,900 units in 2023, a decline of 18.2 percent from the 342,000 units sold in 2022. While home prices in general are expected to improve in the second half of the year, the California median home price is projected to decrease 5.6 percent to $776,600 in 2023, down from the annual median price of $822,300 recorded in 2022. The updated projection on the statewide median price is an increase from the estimate of $758,600 forecast last October. C.A.R. also projects the 30-year fixed mortgage interest rate to average 6.3 percent for the year.
Other key points from C.A.R.'s April 2023 resale housing report include: