California homebuying pace plunges 32% to a record low

Soaring mortgage rates have iced California homebuying to a record low.

Look at what my trusty spreadsheet found when peeking at stats tracking August purchases and pricing for single-family existing homes from the California Association of Realtors. The Federal Reserve’s inflation battle – using high interest rates as the cooling agent – plus stubborn pricing is scaring off numerous house hunters.

California houses were bought at an average 271,800-a-year pace during the 12 months ended in August. How listless has this lengthy slump been?

• Sales are off 32% vs. the previous 12-month period.
• It’s 38% below the 33-year average.
• It’s the slowest 12 months of homebuying in a database that dates to January 1990.
• This breaks the previous low set in the early days of the Great Recession in April 2008. Yes, THAT slow!

This past year’s sales drop hit every corner of the state with near conformity. Southern California buying is off 33% followed by the Bay Area, Central Valley and Central Coast, all off 30%, and the state’s northernmost counties, off 29%.

Now, some folks might point to August’s median sales price of $859,800, the third-highest on record, as a hint that the market’s still on firm footing. This value yardstick is up 3% in a month and up 3% in a year.

But is a record-high price a sign of resilience – or part of the problem? Let’s be honest: It’s a rare house hunter who can afford today’s pricing.

That small group, however, seems to be battling for a slim number of homes on the market.

The Realtors estimate California’s supply of homes to buy is equal to 2.4 months of sales for August. That’s off 4% in a month and down 14% in a year – and 58% below the 33-year average.