California home sales edged up in January for the second straight month, as interest rates eased, according to the California Association of Realtors' January 2023 sales and price report. The 30-year, fixed-mortgage interest rate averaged 6.27% in January, up from 3.45% in January 2022, but below their peak of 7% a few months ago, according to Freddie Mac.
C.A.R. reports closed sales of single-family homes in California totaled 241,520 in January, up 0.4% month-over-month from 240,630 in December. Home sales were down 45.7% from a year ago when 444,400 homes were sold.
"Thanks to slightly waning interest rates and tempering home prices, California's housing market kicked off the new year with another step up and continued to improve in January as buyers gained more confidence in purchasing a home and the affordability outlook improving slightly," said C.A.R. President Jennifer Branchini, a Bay Area Realtor. "While the monthly sales gains have been nominal over the past two months, the market is moving in the right direction, and more gradual improvements could be coming in the months ahead as the market moves into the spring homebuying season in a few weeks."
California's median home price receded in January to $751,330, down 3% from the $774,850 recorded in December, which was the fifth straight monthly decline. January's price also was lower on a year-over-year basis for the third consecutive month, declining 1.9% from the $766,250 recorded last January.
"Job layoffs in recent months, primarily in the tech sector, have contributed to a decline in both sales and prices in higher-priced housing markets, particularly in the San Francisco Bay Area," said C.A.R. Vice President and Chief Economist Jordan Levine. "With home prices expected to remain soft and the mix of sales continuing to shift toward less expensive housing units throughout the rest of 2023, the market will see more downward price adjustments in the next few months."
All counties tracked by C.A.R. experienced a year-over-year sales drop in January. In San Mateo County, sales of single-family homes in January were down 36.8% from December 2022 and down 31% from a year ago. Home sales in Santa Clara County were down 35.4% month-over-month and down 39.9% year-over-year.
Meanwhile, home prices slid more than 10% in six Bay Area counties. San Mateo County's median sales price was $1,625,000 in January, down 18.8% from $2,000,000 in January 2022 and down 3% from $1,675,000 in December 2022. Santa Clara County's January 2023 median home price of $1,530,000, fell 10.8% from the median of $1,716,000 in January 2022 and but 3.5% higher than the median of $1,478,000 in December 2022.
"We've seen home prices in some areas experiencing smaller gains, and in other areas prices have come down," said Jim Hamilton, president of the Silicon Valley Association of Realtors. "In cycles like this, the more expensive areas, like the Bay Area, will experience drops in home sales and prices compared with other places in the country, so this is not unexpected. The fact that Silicon Valley is the home of tech and is now experiencing layoffs is a concern, but we'll have to watch and see how much of an impact the layoffs will have on our market."
Hamilton, who is a Los Gatos Realtor with Compass and also served as 2005 C.A.R. president, added, "I think it's important to remember, while homeownership can bring financial gains long-term, the primary reason for buying a home is to have a place of your own, where you can feel safe and secure, to build memories, and be part of a larger community."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
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