In 2024, the housing market had looked progressively healthier with each passing month. Then Q4 happened, and inventory dropped by over 50%, more than erasing the large gains from the first nine months of the year. Even though sales volume 2024 was similar 2023, far more new listings came to the market, which allowed inventory to grow significantly. 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. The precipitous fall in November and December was unusual and seems to be driven by the extremely low level of new listings coming to market.
In terms of sales and new listings in December 2024, the number of home sales was 17% higher than the previous year, while new listings fell 24%. The North Bay housing market is notably responsive to mortgage rates, and as rates increased in December, it likely gave buyers and sellers pause.
Months of Supply Inventory in December 2024 indicates a sellers’ market in Marin, Solano, and Sonoma and a balanced market in Napa
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 in the North Bay markets trended higher throughout most of 2024. However, in Q4, MSI fell across markets, implying the market shifted more favorably toward sellers. Currently, MSI indicates a sellers’ market in Marin, Solano, and Sonoma and a balanced market in Napa.
