The California housing market is experiencing its largest annual sales increase in November 2024 since June 2021, despite remaining below pre-COVID levels. According to the California Association of REALTORS® (C.A.R.), single-family home sales showed a 19.5% growth year-over-year, although the statewide median home price fell 4% to $852,880 compared to October. However, prices are up by 3.8% compared to the previous year, reflecting a complex mix of challenges and opportunities for buyers and sellers alike.
California Housing Market Roars Back: Biggest Sales Jump Since 2021
Key Takeaways
Growth in Sales: November 2024 saw an annual rise of 19.5% in home sales, the highest since June 2021.
Sales Trends: Total annualized home sales are 267,800 units, remaining below the pre-pandemic norm of 400,000.
Median Prices: Median home price dropped by 4% from October to $852,880 in November, but rose 3.8% year-over-year.
Regional Variations: The Central Coast led in year-over-year sales growth with a 21.7% increase, while prices rose widely across major regions.
Challenges for Buyers: Elevated mortgage rates averaging 6.81%, compounded by limited affordability, continue to create hurdles.
Inventory Trends: The unsold inventory index improved by 13.8%, marking the ninth straight month of double-digit listing growth.
Breaking Down the Numbers
California’s housing market remains a mixed bag. For November 2024, closed escrow sales of single-family homes increased to 267,800, up from October’s 264,870. This marks a 1.1% monthly improvement. However, it still falls significantly short of the 400,000 units typically seen before COVID-19. The recovery is attributed to a prior low base, as 2023 numbers were particularly dismal due to mortgage rate uncertainties and inflation.
Regional Insights
Central Coast: The strongest surge in sales with a 21.7% year-over-year increase and a median price climb of 7.9% to $1,030,000.
San Francisco Bay Area: Demonstrated a 14% sales growth, with the median home price increasing by 5.3% to $1,316,500.
Far North: Sales inched up by 5.2%, but median prices remained flat compared to a year ago at $375,000.
Southern California: Witnessed an 8.7% growth in sales, with median prices rising by 3.1% to $850,000.
Price Trends: A Closer Look at Median Values
While November’s median home price dipped compared to October, year-over-year numbers reveal a gradual upward trajectory fueled by demand in higher-end markets. Notably:
The largest annual price growth occurred in Santa Barbara, with a 51.9% surge, predominantly due to luxury home sales.
Other regions like Lassen and Trinity counties also saw double-digit gains at 48.3% and 37.4%, respectively.
On the other hand, a few regions faced declines: Del Norte experienced the steepest drop at 23.9%, a critical point illustrating the uneven market recovery.
The dip in November’s month-to-month price results largely from shifts in transaction distribution; higher-priced sales slowed compared to budget-friendly markets. This trend softens overall price increases but illustrates underlying demand segmentation.
Market Influencers: The Role of Mortgage Rates & Affordability
A key factor influencing California’s housing market is the continued high mortgage rates, which averaged 6.81% in November 2024, marginally down from the 7.44% rates of 2023. These elevated rates restrict affordability for many prospective buyers, particularly first-time homebuyers, who often find themselves priced out.
In my opinion, affordability will likely remain a persistent challenge moving into 2025, even as mortgage rates potentially moderate further (as projected by industry experts).
Additionally, inventory growth may bring some relief:
Active home listings surged 27% year-over-year, indicating improving market balance.
However, in competitive areas like San Mateo and San Francisco, inventory still lags, with respective declines of 12.5% and 7.5%.
Why Inventory Matters: Unsold Properties & Market Timing
November saw the number of days it took to sell a home rise to 26 days, compared to 21 days in November 2023. This extended timeline offers buyers more leverage but suggests sellers must be prepared for longer waiting periods.
At the state level, the unsold inventory index improved for the ninth consecutive time, reflecting stronger listings and providing buyers a broader range of options—good news as we head into early 2025. However, as the housing market remains slow over the holiday season, such trends are expected to persist into January.
Consumer Sentiment & Forward Outlook
The future looks cautiously optimistic for California’s housing market. Senior economists predict moderate growth in home prices during early 2025, ahead of the spring buying wave—a sentiment bolstered by hopes of lower long-term interest rates in the coming year.
Here’s the expert opinion of C.A.R.’s Chief Economist, Jordan Levine: “Housing sentiment steadily improves as consumers adjust to higher mortgage rates. More buyers are expected to re-enter the market after standing on the sidelines in 2023 and parts of 2024.”
Conclusion
The complexities of California’s housing market in November 2024 underscore the tension between growing affordability pressures and opportunities emerging from improvements in inventory and pricing stabilization. Sellers still see positive-price trends in most areas, while buyers get some relief through broader inventory selections and slower turnaround times.
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