2022 was a turbulent year for the US housing market, as inflation, soaring interest rates, and elevated sales prices combined to cause a slowdown nationwide. Affordability challenges continue to limit market activity, with pending home sales and existing-home sales down month-over-month and falling 37.8% and 35.4% year-over-year, respectively, according to the National Association of REALTORS® (NAR). Higher mortgage rates are also impacting prospective sellers, many of whom have locked in historically low rates and have chosen to wait until market conditions improve before selling their property.
In San Francisco, new listings were down 14.5% for single-family residences and 50.3% for Condo/TIC/Coop properties. Pending sales decreased by 7% for single-family residences and 39.4% for Condo/TIC/Coop properties.
The median sales price was down 7.5% to $1,564,000 for single-family homes and 26.5% to $955,000 for Condo/TIC/Coop properties. Months' supply of inventory increased 12.5% for single-family units but was down 5.6% for Condo/TIC/Coop units.
Economists predict sales will continue to slow and housing prices will soften in many markets over the next 12 months, with larger price declines projected in more expensive areas. However, national inventory shortages will likely keep prices from dropping too much, as buyer demand continues to outpace supply, which remains limited at 3.3 months, according to NAR. Even if prices fall, many prospective buyers will find it difficult to afford a home in 2023, as higher rates have diminished purchasing power, adding hundreds of dollars to monthly mortgage payments.