From Golden Gate Sotheby's Bay Area Market Report…
Continued progress
The housing market continued to improve in February as buyer activity improved following a strong January. Despite continued cost-cutting in technology and other industries, the region's economy added more than 60,000 jobs last year. The unemployment rate rose slightly to 4.1%, but remains tough by historical standards. Continued economic growth and stable mortgage rates should support further recovery in housing demand through the remainder of the year.
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Inventory for sale fell further, while the number of homes on the market increased in February. The number of active listings in the San Francisco Bay Area increased 15% to 3,800, up about 3% from the same month last year. Listings increased in every San Francisco Bay Area county, with the largest increases in Marin and Santa Clara counties and the most modest increases in San Mateo and Sonoma counties. While most regions saw inventory increases, listing counts remained below the historical average.
Economic factors boost sales
Though buyer activity was still somewhat limited by a lack of inventory, sales velocity accelerated. Some buyers were pulled from the sidelines by lower fixed-rate mortgage rates earlier in the year, while others were looking to capitalize on rising stock prices. Housing market activity typically begins to improve in February, but the recent improvement was far more impressive than a typical seasonal increase. Single-family home sales increased to 2,200, up 23% from January and 13% from February of last year. This was the largest year-over-year increase in sales activity since mid-2021.
Of note, all San Francisco Bay Area counties saw an increase in sales since January, with seven counties seeing year-over-year increases. Alameda, Contra Costa and Santa Clara counties accounted for the majority of sales with year-over-year increases of 10%, 15% and 26%, respectively. San Francisco and San Mateo counties also saw increased sales activity with sales up more than 15% year-over-year.
Increased activity at the high end
The number of homes sold between $1.25 million and $2.5 million increased by more than 50% from the previous month. Similarly, more than 250 homes over $2.5 million sold, up 32%, while the number of homes under $1.25 million decreased slightly in February.
The increase in active buyers has also led to increased competition among homes for sale. The average number of days homes stayed on the market decreased in all but one San Francisco Bay Area county in February. Across the San Francisco Bay Area, the average number of days homes stayed on the market was 32 days, 10 days shorter than in January.
Future outlook
The San Francisco Bay Area housing market should continue to improve heading into the spring homebuying season. Potential buyers are adapting to rising mortgage rates, but even a slight decrease in fixed-rate mortgage rates could bring even more buyers into the market. Relatively strong economic conditions continue to support income growth, helping to offset some of the decline in home affordability. Stable prices may bring more potential sellers to the market to place their homes on the market, creating more options for a wider range of buyers. Accelerating sales and price growth could support a strong recovery in the region's housing market for the remainder of the year.
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