Home prices in the San Diego metropolitan area have experienced a decline, with a 0.66% annual decrease reported for August 2023. This downturn reflects a broader trend across the United States, where national home prices are rising at their slowest rate in over two years. The S&P Dow Jones Indices highlighted that San Diego’s performance has contributed to the overall decline in the national average, placing it at No. 14 in the closely monitored 20-city index.
For much of 2024, the San Diego region had been among the leaders in rising home prices, but a steady decline has emerged since then. Other metro areas that experienced significant surges during the post-pandemic housing boom have also seen sharp declines. Notably, Tampa recorded the largest annual drop at 3.31%, followed by Phoenix and Miami, which fell by 1.68% and 1.66%, respectively. In contrast, the national average saw a modest increase of 1.5%, largely driven by growth in cities such as New York and various locations in the Rust Belt.
Economic Factors Impacting Home Prices
Nicholas Godec from S&P Dow Jones Indices pointed out that for the fourth consecutive month, home values have not kept pace with inflation. “Homeowners are seeing their real wealth decline even as nominal prices inch higher,” he stated. This stagnation in price appreciation is the lowest experienced since July 2023, attributed to a combination of high mortgage rates, elevated home prices, and ongoing economic uncertainty.
According to Anthony Smith, senior economist at Realtor.com, signs of a slowing market were evident in August. The number of homes listed for sale in San Diego County dropped significantly, from approximately 7,400 in June to around 6,000 in August. This decline in inventory suggests that even if market conditions improve for some buyers, “limited turnover and cautious sentiment are keeping price appreciation in check,” Smith explained.
The S&P/Case-Shiller Home Price Index tracks repeat sales of identical single-family homes, providing a reliable indicator of economic trends. In San Diego County, the median home price for single-family homes stood at $997,250 in August, which continues to position the area as one of the most expensive housing markets in the United States.
Sales Activity and Mortgage Trends
Despite a slight decrease in mortgage rates, the impact on sales has been minimal. As of the last week of August, the average rate for a 30-year fixed mortgage was recorded at 6.56%, down from 6.19% earlier in the month, according to Freddie Mac. The total number of home sales in San Diego County for August amounted to 2,439, marking the second-lowest sales figure for that month since records began in 1988.
Lisa Sturtevant, chief economist at Bright MLS, noted that various economic factors could continue to influence the housing market, including unemployment rates, job growth, and significant layoffs among large employers. The combination of these elements presents a challenging landscape for both buyers and sellers in the current market climate.
In summary, while some regions are reporting price growth, San Diego’s recent decline in home values illustrates the complexities of the current housing market. The interplay of high prices, mortgage rates, and economic uncertainty will likely continue to shape trends in the coming months.
