From the Golden Gate Sotheby’s Bay Area Market Report…

REBOUNDING SALES

Sales volume began to recover from last month’slow, though the combination of higher mortgagerates and home prices continued to constrain sales activity. In August, nearly 4,100 homes sold throughout the region, an increase of 9% from the previous month but still much lower than one year ago.

The pace of sales for modestly priced homes recovered more than higher priced homes, as sales priced less than $1.25 million increased by roughly 14%. The number of homes sold for more than $5 million decreased for the third consecutive month, the only price tier to do so. With continued volatility in equity and secondary markets and few IPOs in the first half of the year,the luxury home segment slowed in many cities throughout the SF Bay Area.

LESS COMPETITION MEANS FEWER HOMES SELL AT PREMIUM

Overall, the decrease in buyer competition led to fewer homes sold at a premium to the asking price. In August, roughly 40% of homes sold did so for more than the list price, the first time less than half of homes sold at a premium since early 2020. The only county where the majority of homes sold above the list price was San Francisco, where 72% of homes were sold at a premium. While the share of homes sold above the asking price declined in all counties, San Mateo County outpaced its neighbors as its share fell by 30%. By price range throughout the region, more homes priced between $750,000 and $1.5 million sold at a premium than other price tiers, highlighting that competition for relatively affordable homes remains elevated.

LOOKING AHEAD

Though market conditions have slowed from the frenzied pace early in the year, buyer demand persists despite the increased mortgage rates. The initial shock of higher mortgage rates and concerns of the economic health of the region may have begun to dissipate as sales volume trended higher, raising optimism for the housing market to rebound during the next few months. The recent increase in inventory will help bring a better balance to the market, where potential buyers are not discouraged by a lack of viable options or getting outbid multiple times. This rebalancing may continue through the end of the year, but will ultimately lead to a healthier for-sale housing market.

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