Unexpected rebound in California’s February housing market, buyers becoming active again, sales volume increasing.

Despite the ongoing high mortgage rates in the United States, the California real estate market is showing significant signs of rebound. In February, the state recorded the highest housing sales volume in over two years, with a median price set at $829,000.

The California Association of Realtors (C.A.R.) reported that the total sales of existing single-family homes in February reached 283,540 units, a growth of 11.6% compared to January and a 2.6% increase from the same period last year. However, the monthly housing sales volume in California has remained below 300,000 units since September 2022.

C.A.R. noted that the substantial rebound in the California real estate market in February indicates that buyers have become more active after a sluggish start to the year.

Meanwhile, concerns about an economic recession are mounting, dampening consumer confidence. The uncertainty, fueled by expectations of continued fluctuations in mortgage rates in the short term, makes it difficult to predict the future housing market situation. Pending home sales may continue to fluctuate as the market enters the spring homebuying season.

California has always been one of the most expensive housing markets in the United States, with a median price of $398,000, more than double the national median. Prices in coastal city areas are even higher.

Even during downturns in the housing market, California prices have typically remained high. In February, the median home price exceeded $829,000, marking the 20th consecutive month of year-over-year increases.

C.A.R. mentioned that while the price increase in February was the smallest since July 2023, prices are usually expected to start rising in March and continue climbing until the end of the homebuying season in August. However, some analysts believe that this price growth may not be sustained and could gradually stagnate.

Furthermore, there is much speculation about the trend of mortgage rates. C.A.R.’s Chief Economist, Jordan Levine, stated, “Mortgage rates are expected to stabilize later this year. Therefore, the housing market conditions are likely to continue to improve in the second and third quarters.”

While overall housing sales in California have grown significantly, performance varies across regions: among the state’s five major areas, two regions saw an increase in home sales compared to the same period last year, with the San Francisco Bay Area rising by 3.5% and the Central Coast by 1.6%. However, the Far North, Central Valley, and Southern California regions experienced slight decreases in home sales, declining by 4.9%, 3.5%, and 3%, respectively.

In terms of prices, the situation is reversed, with the San Francisco Bay Area being the only region among the top five to experience a drop in annual prices.

In February, the average days needed to sell a single-family home in California was 26 days, with an average price per square foot of $421. According to the Freddie Mac weekly mortgage survey, the average 30-year fixed mortgage rate in February was 6.84%.

While the housing market is showing signs of improvement, the rental market is facing new pressures, especially in the Los Angeles area.

The wildfires that ravaged Los Angeles in January destroyed thousands of single-family homes, forcing residents in the disaster areas into the rental market. This led to chaotic chain reactions in the market and an increase in nearby rents.

Additionally, the latest monthly report on national apartment rents shows that out of the top 100 cities in the United States, 75 cities experienced monthly rent increases in February, with 58 cities seeing annual increases. Los Angeles had a monthly rent hike that was more than double the national average increase.