San Francisco Home Buyers See Little Relief With Shrinking Inventory
As mortgage rates surge, even major housing markets that have enjoyed recent gains, like San Francisco, see a slowdown. Home sales in the city fell by 3.3 percent year-over-year in September— but buyers aren't seeing much relief yet, with the median sales price jumping 14.7 percent to $1.69 million, according to CoStar.
Homes are selling for 108.3 percent of the asking price and San Francisco still ranks among the 40 major markets CoStar tracks.
September marked San Francisco's first year-over-year drop in home sales in months, which could be an early indication that the market is losing momentum, Nigel Hughes, senior director, market analytics, Homes.com/CoStar Group, told GlobeSt.com.
Usually, when sales fall, available inventory increases, which helps reduce price growth, he added.
"However, we haven't seen that yet," Hughes said.
"Buyers are still bidding aggressively and pushing prices higher because there simply aren't enough homes available. That tension between slowing activity and rising prices will be important to watch in the coming months."
San Francisco had just 2.7 months of supply in September, down nearly 24% from a year earlier and the typical home sold in 32 days versus 61 days nationally. Total inventory fell 14% year-over-year to 2,342 homes.
The divergence between sales activity and pricing.
The contrast with San Jose is striking. San Jose's median price fell 3.1% year-over-year to $1.55 million, while inventory rose 9.9% to 3,118 homes. Sales were comparatively resilient, slipping just 1.1% to 1,023, and homes still sold for 100.6% of the asking price.
Hughes said that lower prices do not mean sellers are giving big discounts, though. San Jose homes sold for 100.6% of their final asking price, nearly the same as last year. Nationwide, homes sold for 96% of their list price.
Taken together, September's data show two very different Bay Area dynamics as San Francisco may be showing an early sign of cooling sales activity, but tight supply continues to support strong price growth and intense competition, according to CoStar's report.
Meanwhile, in San Jose, buyers have gained more choice as prices have softened.
Source: GlobeSt/ALM