Greater Sacramento Market Update
Resale Housing Market Just Chilling
Third quarter new sales drop 13 percent year-over-year.
(SACRAMENTO, CA) – Greater Sacramento home sales continue to cool as mortgage interest rate aversion for both buyers and sellers could be driving the market into an early winter. The 1,501 new open escrows reported in September were 10 percent lighter than in August and 5 percent lower than a notably soft, September of last year. New open escrows for the entire third quarter also reflected a 13 percent decrease versus those of 2022.
“Normal seasonality, also known as a fall and winter slowdown, is always expected except, of course, in the fantasy years of 2020 and 2021,” says Pat Shea, President of Lyon Real Estate. “All market trends over the past few months indicate that a lower number of new listings and sales is most likely here to stay until mortgage interest rates fall in a meaningful fashion.”
Although the volume of sales has ratcheted down, buyers have certainly not abandoned the market. The rate of new sales for the third quarter remained reasonable by historical standards and actually left the market with less than 2 months of re-sale housing supply at month-end. For a pre-pandemic comparison, there were 2.5 months of supply on the market based upon the rate of sales in September of 2019. The balance metric, however, is impacted by news sales, new listings entering the market, and standing inventory. New listings entering the market in the third quarter were down 31 percent compared to last year. This shortfall is largely what has kept the market in balance with the lower number of buyers currently active and ready to purchase a home.
The current market balance has also prevented a precipitous fall in prices. The average closed sales price of $669,000 and median of $587,000 for the third quarter were both slightly up but very near the same as last year at this time. The number of closed escrows posted in the third quarter was down 16 percent versus last year and are currently a miserable 26 percent lower year-to-date, as of October 15th. Homes that closed escrow in the third quarter were on the market an average of 27 days versus 29 last year and received approximately 98 percent of original list price versus 96 in the same time frame.
All price points are living a very different experience compared to the market ride enjoyed by home sellers just a few years back. The upper-end market, homes priced above $1,000,000, holds a few interesting highlights. Standing inventory is currently 8 percent lower than last year and new listings entering the market were down 11 percent in the third quarter compared to 2022. New open escrows, on the other hand, were nearly even in the third quarter year over year but were 15 percent higher in September alone versus 2022.
“The market conditions created by incredibly low mortgage interest rates and the work-from-home movement caused a major pull-forward effect that elevated sales algebraically,” says Shea. “A market reversion or correction was inevitable, and we have now been living in it for about 18 months. Many buyers and sellers continue to transact regardless of the interest rate scenario as they choose not to delay their life plans, their goals and their dreams. They know they can use mortgage interest rate buy-downs or re-finance when the clouds clear. You can expect more of that in the coming months as well as a buildup of both sellers and buyers ready to pounce on the market once rates start to tumble.”
This market information was presented by Lyon Real Estate based upon data provided by Trendgraphix Inc., a Sacramento-based reporting company.
About Lyon Real Estate
Lyon Real Estate is the leading independent real estate brokerage company in Greater Sacramento (Sacramento Business Journal). We are proud to be homegrown, privately owned, and internationally known. Lyon has served the area for over 75 years. Last year, the company closed a total of 4,236 transactions and $2.55 billion in sales volume. Lyon Real Estate has over 700 agents in 17 offices located throughout the region. The company is a member of the Leading Real Estate Companies of the World®, the largest network of premier locally branded firms, as well as LeadingRE’s Luxury Portfolio International® program. In addition to its real estate services, Lyon Real Estate offers RELO Direct, a global relocation program. Since 2015, the Lyon Cares Foundation has contributed more than $1,209,365 to local nonprofits.
About TrendGraphix, Inc.
TrendGraphix, Inc. is a real estate data analytics company based in Sacramento that uses local Multiple Listing Service (MLS) data. TrendGraphix provides highly visual performance and market statistical graphs to real estate brokers, agents, and MLS/Realtor associations across the country. TrendGraphix’s programs are currently used by tens of thousands of brokers and agents in more than 300 brokerages across the nation. For more information about TrendGraphix, visit www.trendgraphix.com.