California Housing Market Shows Resilience with Strong Year-End Sales Despite Challenges

California Housing Market Wrap-Up: A Strong Finish to 2024

As 2024 came to a close, California's housing market demonstrated remarkable resilience, evidenced by a year-end surge in home sales. According to the California Association of Realtors (C.A.R.), existing single-family home sales reached a seasonally adjusted annualized rate of 268,180 transactions in December, reflecting a slight increase compared to November's figures and a significant jump of 19.8% year-over-year. This marks the most substantial yearly increase since June 2021, indicating a potential recovery phase for the state's housing sector.

Sales and Prices: A Closer Look

The November figures showed existing home sales at 267,800, but December's numbers suggest a positive momentum that could uplift the overall market. However, when compared to pre-COVID levels, sales figures remain below the norm of 400,000 units, highlighting the ongoing challenges in the market. The annualized sales total of 269,030 for 2024 represents a 4.3% increase from the previous year, marking the first annual gain in three years.

December's statewide median home price also revealed a positive trend, climbing to $861,020 – up 1% from November and a notable 5% increase from December 2023's figure of $819,820. This price growth has persisted for 18 consecutive months, reflecting the steady demand for housing, despite the headwinds.

C.A.R.'s 2025 President Heather Ozur commented on the market's performance with optimism, stating, "California's housing market ended the year on a positive note with home sales reaching the highest level in five months." The report emphasized that while high mortgage rates and the impact of wildfires have posed challenges, there remains an expectation for increased demand, particularly as the spring homebuying season approaches.

Regional Variations in Sales and Pricing

At the regional level, California experienced widespread improvements in home sales, with four out of the five major regions posting double-digit percentage increases compared to the previous year. The Central Coast region topped this list with a remarkable 20.5% rise, followed closely by Southern California at 16.3%, the Central Valley at 15.1%, and the San Francisco Bay Area with an increase of 14.6%. Only the Far North region saw more modest growth at 6.3%.

Interestingly, 42 of the 53 counties surveyed noted a year-over-year sales increase, with Mendocino County achieving an impressive 76% growth. However, not all areas exhibited positive trends; ten counties experienced declines, with Lassen County facing the sharpest drop of 59.1%.

Market Outlook for 2025

Looking ahead, C.A.R. Senior Vice President and Chief Economist Jordan Levine projected a cautiously optimistic outlook for the California housing market in 2025. While improvements in sales and pricing activity are expected to continue, several hurdles remain, including persistent inflation, an ongoing insurance crisis, and potential policy changes from the new White House administration. These factors could impede the market's trajectory.

The statewide Unsold Inventory Index also reflects market dynamics, indicating that while inventory dropped month-over-month, it saw an uptick from 2.6 months in December 2023 to 2.7 months in December 2024. This statistic underscores the importance of carefully monitoring supply levels as the market adjusts to new economic conditions.

In conclusion, California's housing market showcased significant resilience as 2024 drew to a close, highlighted by increased sales and median prices. As the new year unfolds, stakeholders will be watching the interplay of demand, pricing trends, and external influences to gauge the market's direction for 2025.