Single-family home sales rose in May in California, but high mortgage rates combined with low inventory limited the recovery statewide, including in the San Francisco Bay Area and Los Angeles markets.
The number of sales statewide rose 9.8% in May, when escrow closed about 289,500 homes, compared with 264,000 in April, according to a survey released June 20 by the California Association of Realtors, a trade group. While there is something to cheer about in month-to-month comparisons, year-over-year comparisons are more evidence that the market has changed. The number of homes sold in the state is down 23% since May 2022, when about 378,000 homes traded in the state.
Like the broader state, sales in the San Francisco and Los Angeles markets rose month-over-month while showing year-over-year declines.
Compared to May 2023 and May 2022, Los Angeles County will see an increase of approximately 25% month-on-month from April to May and a decrease of approximately 21% year-over-year.
The San Francisco Bay Area saw a 30% month-on-month increase between April and May, and a decline of about 24% between May 2023 and May 2022.
Justin Fichelson of San Francisco-based Avenue 8 said the boom in the artificial intelligence technology market has recently boosted San Francisco real estate.
“The market is recovering a little bit. I’m seeing mixed offers in some places,” Fichelson said of San Francisco’s uptown neighborhoods.
Jordan Levine, chief economist at CAR, said he expects more of the same monthly increase next quarter, but a year-over-year decline.
“While home sales rose steadily in May, we don’t expect a quick recovery as the lock-in effect keeps would-be sellers with low-rate mortgages from listing their homes on the market and strains inventory,” Levine said .
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Desyana Willis, a broker with Amalfi Estates in the Los Angeles area, was in the same situation when talking with lenders.
“A lender told me that there has been an increase in applications, but they can’t move them because the sellers are staying put. They’re locked into 2% and 3% rates,” she said.
