California home sales sink in March

The spring home-buying season got off to a slow start in California, where sales of single-family homes declined from February to March, according to a report released Wednesday by the California Association of Realtors (CAR).

The organization reported that the state’s seasonally adjusted annualized rate of sales fell by 7.8% during the month and by 4.4% year over year. The yearly sales pace of 290,740 homes in March represented the 18th straight month in which the rate remained below 300,000. Sales were up 0.7% in first-quarter 2024 compared to Q1 2023.

“While home sales lost momentum in March, the housing market remains competitive as we’re seeing the statewide median home price reaching the highest level in seven months, and homes selling quicker than last year,” CAR President Melanie Barker said in a statement.

“On the supply side, the market continues to improve with an increasing number of properties being listed on the market as more sellers begin to accept the new normal.”

The statewide median sale price rose on an annualized basis for a ninth straight month in March, jumping 7.7% to $854,490. The figure was also 6% above February’s median sale price of $806,490. Price growth reached double digits in both the San Francisco Bay Area and Southern California regions at 15.5% and 11.1%, respectively.

Active listings in March posted their largest annualized increase in 13 months, a potentially positive sign for the remainder of the spring purchase season, CAR reported. And last month’s level of unsold inventory was up 23.8% year over year, although it was down 13.3% compared to February 2024.

Higher-priced homes are selling more frequently than lower-priced ones, CAR noted. Transactions of properties priced at $1 million or more increased by 9.9% year over year in March, while those priced below $500,000 decreased by 2.4%. This continued a trend seen over the past few months.

“With mortgage rates reaching the highest levels since mid-November 2023, the housing market struggled to build on the momentum exhibited in the first two months of this year,” Jordan Levine, CAR senior vice president and chief economist, said in a statement.

“While sales could be hindered by higher rates in the coming weeks, the uptick in recent months suggests that we could see a bounce back in housing activity when the market digests the latest inflation report.”

Fewer insurance options may be hampering sales in the Golden State. Last month, State Farm General Insurance announcedthat it would not renew some 30,000 policies for single-family owner-occupied and rental homes. Last year, State Farm and Allstate said they would no longer accept new applications for business and personal lines of property and casualty insurance in the state.

Homeowners insurance costs are rising sharply across the U.S., according to a recent analysis by S&P Global. From 2018 through 2023, effective rates jumped by 33.8% across the country. California outpaced the national average as insurance rates rose by 43.7% during this five-year period.