May Home Sales Increase in California, But No Big Recovery
Sales of single family-homes increased across California in May, but high mortgage rates coupled with low inventory restrained recovery across the state, including the San Francisco Bay Area and Los Angeles markets.
The number of sales across the state were up 9.8 percent in May, when escrows closed for about 289,500 homes, compared to April when escrows closed for 264,000 homes, according to a survey released June 20 by trade group California Association of Realtors. While there was something to cheer in a month-to-month comparison, the year-over-year comparison served as more proof that the market changed. There was a 23 percent decline in the number of homes sold since May 2022, when about 378,000 homes traded in the state.
Like the wider state, the San Francisco and Los Angeles markets have seen month-to-month sales increases, which are juxtaposed by year-over-year declines.
Los Angeles County experienced a month-to-month increase from April to May of about 25 percent and a year-over-year decline of about 21 percent, comparing May 2023 to May 2022.
The San Francisco Bay Area saw a month-to-month increase of 30 percent between April and May compared to about a 24 percent decline comparing May 2023 to May 2022.
Justin Fichelson of San Francisco-headquartered Avenue 8 said a boom in the artificial intelligence tech market has lifted San Francisco’s real estate recently.
“The market is recovering a bit. I’m seeing some places with multiple offers,” Fichelson said of San Francisco residential neighborhoods.
Expect more of the same monthly increases, but year-over-year declines for the next quarter, said Jordan Levine, CAR’s chief economist.
“While home sales rose solidly in May, we don’t expect to see a rapid recovery because of the lock-in effect that’s keeping prospective sellers with low interest rate mortgages from listing their homes on the market and keeping inventory extremely tight,” Levine said.
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Desyana Willis, an agent with Amalfi Estates in the Los Angeles area, encounters the same situation when talking to lenders.
“A lender told me there was an uptick in applications, but they can’t move them because sellers are staying in place. They’re locked into 2 percent and 3 percent rates,” she said.
