Santa Clara County home sales up 30.5% from last July
The lowest interest rates since spring triggered a rebound in California home sales in July. According to the California Association of Realtors, July's sales pace rose 3.6% from the revised 270,200 homes sold in June and were up 4.1% from a year ago. Except for the Far North, where the Park Fire began in late July, home sales in all regions rose higher than July 2023. Home sales in the San Francisco Bay Area sales increased the most at 19.2%, and were up by 1.3% from June.
In the nine-county Bay Area, San Francisco County had the highest annual sales gain of 34.8%. Santa Clara came in second with a gain of 30.5%, followed by Alameda at 24.9%. San Mateo County homes sales increased 18.2%.
"The lower interest rates helped bring back those buyers sitting in the sidelines. We could likely see momentum returning to the market should the Fed decide to cut rates in September or even before," said Eileen Giorgi, president of the Silicon Valley Association of Realtors. "Though fall is traditionally not the peak of the homebuying season, activity will likely ramp up should interest rates continue their downward trend. Even those homeowners locked in at lower rates are coming around as life changes happen and they can no longer wait to sell or buy."
Also optimistic, C.A.R. President Melanie Barker said, "Despite transitioning into the off-season, the market should remain vibrant in the coming months if the availability of homes for sale continues to improve, and mortgage rates moderate further in the third and fourth quarters."
California's July's median sales price of $886,560 was 6.5% higher than $832,530 recorded in July 2023, but dipped 1.6% from $900,720 in June. The San Francisco Bay Area (3.6%) came in third in highest home price gains, after the Central Coast (8%) and Southern California (6.1%).
In San Mateo County, the July median sales price of $2,100,000 was 5.8% higher than $1,984,000 in July 2023, and slipped 0.5% from $2,110,000 in June. Santa Clara County's July median sales price was $1,880,000, up 4.4% from $1,984,000 in the prior year and down 3.8% from $1,955,000 in the prior month.
Last week at the Fed's annual economic policy symposium in Jackson Hole, Wyoming, Fed Chair Jerome Powell laid the groundwork for interest rate cuts ahead, stating, "The time has come for policy to adjust. … My confidence has grown that inflation is on a sustainable path back to 2%."
Powell, however, did not indicate the timing or extent of the rate adjustments. National Association of Realtors Chief Economist Lawrence Yun has previously predicted rate cuts won't be large overnight.
"The rate-cutting cycle is not one-and-done. Six to eight rounds of rate cuts all through 2025 look likely. … The new normal for mortgage rates will be around 6% and definitely not to 4% as was before COVID," said Yun.
Housing affordability levels would improve with lower rates. C.A.R. recently reported that the state's housing affordability index dropped to its lowest level in nearly 17 years during the second quarter of this year, when only 14% of the state's homebuyers could afford to purchase a median-priced home. This was down from 17% in the first quarter of 2024 and down from 16% in Q2 2023.
Giorgi said the improvement in lower borrowing costs would motivate homebuyers, though once this happens there will likely be more competition for homes. Home prices could rise if housing inventory cannot fulfill the rise in demand.
"It's important for homebuyers and sellers alike to stay informed of these trends and consult their Realtor so they can make educated decisions," said Giorgi.
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.
Variations of this article have appeared in local area newspapers.
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