The impact of elevated mortgage rates continues to suppress home sales across California, with new data from the California Association of Realtors (CAR) highlighting the ongoing challenges in the state’s housing market.
While there was a slight uptick in single-family home sales — up 4% year-over-year — this marks the first increase in sales in three years. However, despite the modest improvement, sales activity remains well below long-term averages.
Guillermo Flores, a senior research analyst with CAR, emphasized that while there was a slight recovery, overall sales remain sluggish. “We’ve seen sales consistently below 400,000 homes per month for over two and a half years now,” Flores said.
As of Monday, the average 30-year fixed mortgage rate is 7%, a stark contrast to the historically low rates during the COVID-19 pandemic. Housing experts note that expectations for rates to decrease soon have diminished, with the Federal Reserve still navigating challenges related to inflation.
“The focus has shifted toward the broader economic conditions, particularly how inflation will continue to affect the housing market,” said Jordan Levine, chief economist at CAR. “The macroeconomic environment will definitely influence local housing dynamics.”
Regarding home prices, the median price for single-family homes in California was reported at $861,020 in December 2024 — a slight increase of $9,000 from December 2023. However, prices have softened from the $908,000 recorded in May.
CAR’s Oscar Wei, deputy chief economist, noted that the recent price gains have been smaller compared to earlier this year. “The six-month moving average shows a slowdown, signaling potential further cooling in home prices,” Wei added.
Looking regionally, the San Francisco Bay Area remains the state’s priciest market, with a median home price of $1.2 million. The Central Coast follows closely at $995,000, while Southern California saw a median price of $850,000 by the end of the year.
With the current market trend, experts anticipate that home prices could continue to experience slower growth as high mortgage rates persist .
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