San Diego Real Estate Market Update – March 2023
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Monthly Indicators
In its continued effort to curb inflation, the Federal Reserve raised its benchmark interest rate in February by a quarter-percentage point to 4.50% – 4.75%, its 8th rate hike since March of last year, when the interest rate was nearly zero. Mortgage interest rates have dipped slightly from their peak last fall, leading pending sales to increase 8.1% month-to-month as of last measure, but affordability constraints continue to limit homebuyer activity overall, with existing-home sales declining for the twelfth consecutive month, according to the National Association of Realtors® (NAR).
Closed Sales decreased 32.9 percent for Detached homes and 36.1 percent for Attached homes. Pending Sales decreased 30.9 percent for Detached homes and 27.5 percent for Attached homes. Inventory decreased 1.8 percent for Detached homes but increased 4.1 percent for Attached homes.
The Median Sales Price was down 1.1 percent to $900,000 for Detached homes and 1.6 percent to $616,000 for Attached homes. Days on Market increased 87.0 percent for Detached homes and 105.3 percent for Attached homes. Supply increased 37.5 percent for Detached homes and 66.7 percent for Attached homes.
With buyer demand down from peak levels, home price growth has continued to slow nationwide, although prices remain up from a year ago. Sellers have been increasingly cutting prices and offering sales incentives in an attempt to attract buyers, who have continued to struggle with affordability challenges this winter. The slight decline in mortgage rates earlier this year convinced some buyers to come off the sidelines, but with rates ticking up again in recent weeks, buyers are once again pulling back, causing sales activity to remain down heading into spring.
Housing Supply
Purchases of new single-family homes increased 7.2% month-over-month as of last measure, exceeding economists’ expectations and rising to the highest level in nearly a year, according to the US Census Bureau. The limited supply of existing homes on the market, along with lower mortgage interest rates, softening sales prices, and a rise in the number of builders offering sales incentives, helped boost new home purchases, causing builder confidence to increase for the second consecutive month in February. For the 12-month period spanning March 2022 through February 2023, Pending Sales in the San Diego were down 31.4 percent overall. The price range with the smallest decline in sales was the $1,000,001 to $1,250,000 range, where they decreased 8.6 percent.
The overall Median Sales Price was up 9.3 percent to $820,000. The property type with the largest price gain was the Condos – Townhomes segment, where prices increased 11.6 percent to $625,000. The price range that tended to sell the quickest was the $1,000,001 to $1,250,000 range at 24 days; the price range that tended to sell the slowest was the $5,000,001 and Above range at 66 days.
Market-wide, inventory levels were up 0.1 percent. However, the property type with the largest gain was the Condos – Townhomes segment, where they increased 4.1 percent . That amounts to 1.1 months supply for Single-Family homes and 1.0 months supply for Condos.
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