California home sales came in below the 300,000-benchmark for the ninth consecutive month in June, as rates remained elevated in the past couple of months, according to a report from the California Association of Realtors (CAR).
All was not lost, however, as the annual dip dropped below 20% for the first time in 12 months.
The statewide median price remained above $800,000 for the third straight month, said the CAR report, as an ongoing tight supply continued to keep prices consistent.
While this represents a modest increase of 0.3 percent from May, it does signify a year-over-year decline of 2.4 percent from June 2022, said a report from Norada Real Estate Investments.
“However, this decline is the smallest since January 2023, indicating a potential stabilization in home prices. Tight housing supply, coupled with a higher number of high-end homes sold, has contributed to the upward pressure on prices,” the Norada report added.
Consumers can look for monthly price dips in the coming months, however, as the market goes through its typical seasonal pattern and interest rates remain elevated for most if not the entire third quarter, said the CAR report.
Consumers also seem to be more resilient than predicted six months ago, and economists are lowering the odds of a recession for the US, the report added. A solid economy could actually still mean a delay in the Fed loosening its rate belts, which could result in mortgage rates staying high for a little longer.
Meanwhile, sales of existing homes in California continued to decline on a year-over-year basis for the 24th straight month in June, saic CAR, but also registered the smallest yearly drop since May 2022.
According to the CAR report, a short supply and high mortgage rates continued to suppress home sales, while strong market competition continued to put upward pressure on home prices.
Moving closer and closer to the end of the home buying season, the statewide median price is near its peak and will level off in July or August, said CAR.
Should interest rates fall in the next couple of months, the market will see some improvement in affordability, which could help push sales up in the second half of the year, the report added.
Housing inventory in California inched up in June from the prior month but dipped again from the same month of last year, as tight supply continued to be the norms, said CAR.
The statewide unsold inventory index in June 2023 dropped 8.3% from a year ago and increased 4.8% on a month-over-month basis, the report added.
Supply conditions in the state are not likely to see any meaningful improvement for the rest of the third quarter, CAR also reported, as the state level fell sharply by 34% from last year, registering the largest year-over-year decline since May 2021.
With mortgage rates expected to be high in the next couple of months, noted the CAR report, which could likely affect the ongoing short inventory.