The Local Lowdown: August 2024

Michelle Kim | August 28, 2024

The Local Lowdown

Quick Take:

The median single-family home prices are still near their record highs, and Napa prices reached an all-time high in July. We expected price contraction after peaking in the second quarter, which is the seasonal norm. Prices will likely decline for the rest of the year.
Total sales in the North Bay fell less than 1% month over month, highlighting the high demand. Homes coming under contract rose significantly, up 23.3%, indicating that sales may increase in August.
Months of Supply Inventory for condos increased above three months of supply in July, which is a shift that favors buyers. MSI still implies a sellers’ market for single-family homes, however, in most of the North Bay.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

The median single-family home in Napa reached an all-time high

In the North Bay, single-family home prices in Napa, notably, reached a record high in July 2024. Persistently low inventory relative to the high demand in the area has more than offset the downward price pressure from higher mortgage rates. Prices in the North Bay generally haven’t experienced larger drops due to higher mortgage rates, and as mentioned in the Big Story, higher mortgage rates are contributing to prices staying high. Year to date, in July, the median single-family home price rose across the North Bay. Year over year, prices increased most significantly for single-family homes in Napa, up 23%. Prices typically peak in the summer months, so we don’t expect new all-time highs for the rest of this year. However, we do expect some minor price contraction in the coming months. Additionally, demand is high enough that it will create price support as supply declines in the second half of the year.

High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates near 6%. Now that rates are declining again, sales could get a little boost, but the housing market typically begins to slow this time of year.

Sales fell slightly, while new listings rose month over month

The 2024 housing market has looked progressively healthier with each passing month. We’re far enough into the year to know that inventory levels are about as good as we could’ve hoped. In 2023, single-family home inventory followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings slowed the market considerably last year. Even though sales volume this year was similar to last, far more new listings have come to the market, which has allowed inventory to grow. In July 2024, the number of homes for sale was 24% higher than last year and 1% higher than in July 2022.

Typically, inventory begins to increase in January or February, peaking in July or August before declining once again from the summer months to the winter. It’s looking like 2024 inventory, sales, and new listings will resemble historically seasonal patterns, and at more normal levels. Now that we’re more than halfway through the year, we expect inventory, sales, and new listings to decline through the rest of the year.

Months of Supply Inventory in July 2024 indicated a sellers’ market for single-family homes and a balanced market for condos

Months of Supply Inventory (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 long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI trended higher in the second half of 2023, hovering between a balanced market and a sellers’ market. MSI in the North Bay market has trended horizontally for the past nine months. However, in July, single-family home MSI fell, implying the market shifted more favorably toward sellers, while condo MSI rose above three months of supply, indicating the market is more balanced.