California home sales retreated in January as the effects of elevated interest rates depressed housing demand to the lowest level in more than a year, the California Association of Realtors reported.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 254,110 in January, according to information collected by C.A.R. from more than 90 local Realtor associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2025 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
January’s sales pace fell from the 282,490 homes sold in December and was down 1.9 percent from a year ago, when a revised 259,160 homes were sold on an annualized basis. The January sales level was the lowest in 13 months, and the double-digit month-to-month sales decline was the biggest decrease in 30 months. The year-over-year decline was the first in eight months.
Mortgage rates have been trending downward in the past four weeks since reaching their recent peak, which should help improve home sales moving forward. However, closed sales will likely remain soft in February and March, particularly since the aftermath of the Los Angeles area wildfires will continue to slow market activity in Southern California over the next few months.
The market has been extremely fluid since the wildfires began in the first week of January. Closed sales in the six primary cities affected by the fires (Altadena, La Canada Flintridge, Malibu, Pasadena, Sierra Madre and Topanga) had dropped considerably from nearly 15 per week in the weeks ending January 4 and January 11, to just five over the last two weeks of the month. That represents a nearly 70 percent cumulative decline in weekly sales volume from the start of January. Winter is typically a slow time for the housing market in general, but this compares with sales that were up 2 percent cumulatively over the second half of January in the rest of the state (i.e., excluding Los Angeles County). With mortgage rates remaining elevated and the negative impact of the fires likely to have an effect in Southern California in the next few months, pending sales could remain soft in the first quarter of 2025.
“Home sales slowed last month, impacted by high mortgage rates and the devastating wildfires in Southern California,” said C.A.R. President Heather Ozur, a Palm Springs REALTOR®. “While sales are expected to remain soft this month and next, it is encouraging to see an uptick in new listings as the market gears up for the spring homebuying season. The improvement in supply conditions will offer buyers more options to choose from and allow some demand to be fulfilled as competition heats up in coming months.”
The January statewide median price decreased from December but continued to climb on a year-over-year basis for the 19th straight month. The January median price declined 2.6 percent from $861,020 in December to $838,850 in January and was up 6.3 percent from a revised $789,480 in January 2024. The acceleration in price growth is an indication that further price gain could still be observed in the coming months. The modest January price slip was due partly to seasonality and partly to a change in the mix of sales. Home prices could moderate further in February but should begin to climb in March as the market gears up for the upcoming spring homebuying season.
“After dipping for the first time in a year in December 2024, new active listings at the state level rebounded with the fastest year-over-year growth in nearly four years. While the number of newly listed properties is still below early 2020’s pre-pandemic levels, last month’s total marked a five-year high for January,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “With mortgage rates remaining elevated since late 2022, many homeowners are coming to terms with the fact that 3 percent rates aren’t returning anytime soon. As a result, more sellers are deciding to list their homes on the market.”
For more on this story, and other key points from C.A.R.’s January 2025 resale housing report, click here.