February Market Update

Our Team's Commitment

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones. As your local real estate experts, we feel it's our duty to provide you, our valued client, with all the information you need to better understand our local real estate market. Whether you're buying or selling, we aim to ensure you have the best, most pertinent information. Thus, we've compiled this monthly analysis to break down the specifics about the market. As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

The Big Story

Mortgage rates were remarkably stable in January, and near-term Fed rate cuts look less likely. After the average 30-year mortgage rate fell over 1% in the last two months of 2023, rates stabilized between 6.60% and 6.70% in January 2024. Median prices continued to decline in January, but we expect prices to rise in February — the seasonal norm. Sales fell 6% year over year and 1% month over month, hitting the lowest levels in modern history. Inventory fell nearly 12% month over month, making supply incredibly tight regardless of slower sales. Consumer confidence has only recently begun climbing despite nearly every economic indicator showing a strong U.S. economy for some time.

Local Lowdown

The median single-family home price declined 3.8% from December 2023 to January 2024, while the median condo price hit an all-time high. Year over year, prices appreciated, up 3.6% for single-family homes and 15.0% for condos. Active listings in Greater Sacramento rose 1% month over month, as new listings increased 78% from December 2023 to January 2024. Higher supply only benefits the housing market after inventory hit a record low in December. Months of Supply Inventory rose in December 2023 and January 2024, as new listings outpaced sales, but still indicates a sellers’ market.

Analysis

In the Greater Sacramento area, low inventory has more than offset the downward price pressure from higher mortgage rates. The median single-family home price in January 2024 was 11% below its all-time high reached in May 2022. The median condo price reached an all-time high in January. However, this may be a statistical outlier expected to correct next month.

Since the start of 2023, single-family home inventory has followed fairly typical seasonal trends, but at a significantly depressed level. New listings rose nearly 78% month over month, and the number of new listings coming to market is a significant predictor of sales. Month over month, homes coming under contract increased 36%. Year over year, inventory is down 12%, but sales and new listings are up 10% and 12%, respectively.

Market Trends

Months of Supply Inventory (MSI) in January 2024 indicated a sellers’ market. The MSI quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The January 2024 SP/LP was 4% higher than last year, meaning sellers overall are expected to receive a higher percentage of the list price in 2024 than they did in 2023.