For the fourth consecutive month, California’s existing single-family home sales have trailed behind last year’s levels. In July, sales were down by 4.1% year-over-year, with a total of 261,820 on a seasonally adjusted annualized rate. This slowdown has pushed year-to-date sales into negative territory for the first time in six months, a clear indicator that the market is losing some of its previous heat.
This deceleration is largely attributed to elevated mortgage rates and lingering economic concerns, which have prompted some buyers to step back and take a wait-and-see approach.
Prices and Affordability: The Grand Scheme of Things
Perhaps the most surprising finding from the C.A.R. report is the year-over-year decline in California’s median home price. At $884,050 in July, the median price was down by 0.3% from the previous year and 1.7% from June. This marks the third consecutive month of year-over-year price decreases. While any price drop is noteworthy, it’s essential to put this decline in context. Compared to the massive drop of nearly 40% during the Great Recession, a 0.3% dip is a “nothing burger,” as one expert put it.
Inventory and Negotiation: Rich Uzelac’s Insights
One of the most significant changes in the market is the rise in housing inventory. The unsold inventory index (UII), which measures the number of months it would take to sell the current supply of homes, was 3.7 months in July. The total number of active listings in the state is up by a staggering 37.7% from a year ago, reaching a 69-month high. In my opinion, this increased supply is giving buyers more choices and, importantly, more leverage. The statewide sales-price-to-list-price ratio dropped to 98.5% in July, the lowest in nearly two years. This means that, on average, homes are selling for 1.5% below the asking price, a far cry from the bidding-war frenzy of 2021 when homes were selling for an average of 4% over asking.
*Sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its original list price and is expressed as a percentage. A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.
The Road Ahead: Patience and Opportunity
The current market is a mix of slowing sales, stabilizing prices, and rising inventory. While the pace of growth in active listings is decelerating due to a lack of new homes hitting the market—likely because many homeowners with low mortgage rates are reluctant to sell—the overall trend favors buyers. Homes are staying on the market longer, with the median days to sell rising to 28 days from 20 days a year ago.
For buyers, this is an opportunity to navigate a less competitive landscape. You have more time to find the right property, and more room to negotiate on price and terms. For sellers, it’s a reminder to price your home competitively and prepare for a market that is no longer a guaranteed feeding frenzy.
The California real estate market is clearly at a turning point. It’s a time for patience, strategy, and careful analysis. The days of homes flying off the market with multiple, over-asking offers appear to be on pause. Instead, we’re entering a more normalized phase where market fundamentals, like supply and demand, are beginning to reassert themselves.
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— Richard Uzelac, CEO, RealtyTech
