California home sales volume dipped slightly in August 2021 after reaching the highest levels seen since the 2008 recession in June. Still, the number of sales closed in August 2021 were a significant 15% above a year earlier.

48,100 new and resale home transactions closed escrow in California during August 2021.

The past 18 months have seen homebuyers taking advantage of low interest rates and stimulus boosts. However, as the effects of stimulus are now behind us and interest rates are tilting higher, homebuyers have begun to ease off the gas.

At an annual rate, 2020 ended with 439,200 home sales in California. In total, 1,700 more home sales closed in California during 2020 than the prior year, amounting to a meager 0.4% increase in sales, despite the volatile dips and swings experienced during this pandemic year. 2020’s flat performance followed years of flat-to-down sales volume in the aftermath of the profitable years of the Millennium Boom.

Is it a seasonal trend, or something more?

Home sales vary from month-to-month for a variety of reasons, most significant being homebuyer demand. This demand is influenced by several factors currently at work in California’s homebuying market, including:

  • seasonal differences, as sales volume tends to peak mid-year, falling into the slow winter months;
  • mortgage interest rates, which have remained near historic lows throughout 2020-2021;
  • homebuyer confidence, which has swung wildly since the outset of the 2020 recession and continuing through today’s recession hangover;
  • available multiple listing service (MLS) inventory, which remains below homebuyer demand in 2021; and
  • in 2021, homebuyer fear-of-missing-out (FOMO), which has pushed both sales volume and prices over sustainable heights.

Offering a wider lens for viewing home sales, year-to-date (YTD) home sales volume continues to rise above 2020, at 37% above a year earlier as of August 2021. YTD sales suggest home sales volume will end the year around 25%-35% over 2020, a huge jump compared to the past decade of stagnant sales volume.

A forecast for California home sales

Despite the sales volume jump being experienced in 2021, home sales are expected to fall back in 2022, due to:

  • the recent expiration of the foreclosure moratorium, which will cause a backlog of forced sales to hit the market, dragging down home prices and discouraging homebuyers;
  • lower homeowner turnover as buyer FOMO subsides; and
  • the ongoing recovery of 2020’s job losses, 1.3 million of which are still absent from the jobs market as of July 2021.

The housing market won’t begin a consistent recovery until well after the need for government intervention and the pandemic response have ended, a timeline which continues to shift. Then, California’s housing market will need to emerge from the underlying recession and recover the historic job losses of 2020. This stable recovery is not likely to even begin until around 2023-2024.

Read more about home sale trends and view California’s home sales volume charts here.