San Diego Housing Market Update for October of 2023
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Supply increased 2% over the last few weeks, and is down 59% since last year.
The active listing inventory increased by 65 homes in the past two weeks, up 2%, and now sits at 2,731 homes, its highest level since the start of January. It is still the lowest September reading since tracking began in 2012, which is likely to occur in the next few weeks.
Peaks typically occur between mid-July and the end of August, but this year is delayed due to the higher mortgage rate environment further softening demand. As soon as a peak is reached in the coming weeks, expect the inventory to slowly fall for the remainder of the year, mirroring the 2021 trajectory. This will lead to a very low inventory level to start 2024.
Last year, the inventory was 4,338 homes, 59% higher, or 1,607 more. The 3-year average before COVID (2017 through 2019) is 7,074, an additional 4,343 homes, or 159% extra, nearly triple where it stands today.
Homeowners continue to “hunker down” in their homes, unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage. For August, 2,643 new sellers entered the market in San Diego County, 2,408 fewer than the 3-year average before COVID (2017 to 2019), 48% less. These missing signs counter any potential rise in the inventory.
Demand decreased by 2% in the past couple of weeks.
Demand, a snapshot of the number of new pending sales over the prior month, decreased from 1,612 to 1,577 in the past couple of weeks, down 35 pending sales, or 2%. Demand has continually fallen since the beginning of August meaning the Autumn Market has arrived. Expect demand to slowly fall for the rest of the year unless there is a significant change in mortgage rates. If the U.S. economy shows any signs of slowing, rates could drop below 7% for the first time since May, which would help stimulate demand with an improvement in home affordability.
Last year, demand was at 2,078, 32% more than today, or an extra 501. The 3-year average before COVID (2017 to 2019) was 3,031 pending sales, 92% more than today, or an additional 1,454.
With a drop in demand and a slight rise in supply, the Expected Market Time (the number of days to sell all San Diego County listings at the current buying pace) increased from 50 to 52 days in the past couple of weeks. Last year, the Expected Market Time was 63 days, slower than today. The 3-year average before COVID was 71 days, significantly slower than today. Report provided by Reports on Housing.
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