In March, the housing market experienced a slowdown as mortgage rates continued to rise, affecting the momentum of the spring homebuying season. Despite this, REALTORS® remain optimistic, anticipating an improvement later in the season. The housing supply improved slightly, offering hope for better days ahead, particularly when mortgage rates eventually decrease.

California's housing market saw a decline in sales in March compared to the previous months, marking the first year-over-year decrease in three months. Existing single-family home sales totaled 267,470, down 7.8% from February and 4.4% from March 2023. However, pending sales showed a slight increase year-over-year, indicating a potential rebound in the market after absorbing recent inflation news.

The median home price in California reached its highest level in seven months, standing at $854,490 in March, up 6.0% from February and 7.7% from March 2023. This marked the ninth consecutive month of annual price increases, with higher-end markets performing better. Tight inventory and seasonal factors are expected to continue driving prices upward in the coming months.

Insights from REALTORS® suggest a slow but steady improvement in the housing market compared to the previous year. While buyer and seller traffic expectations slightly dipped from February, they remained higher than in March 2023. The market remained competitive, with homes typically selling in less than a month and receiving an average of 3.1 offers in March.

Residential construction saw a sharp decline in March, with housing starts dropping 14.7% from February and 4.3% from March 2023. Builders expressed concerns about inflation and the potential delay in rate cuts, leading to a pull-back in construction activity. Building permits also decreased, indicating a cautious outlook among builders for the year.

In contrast, retail sales exceeded expectations in March, with a 0.7% month-over-month increase and a 4.0% year-over-year increase. Higher gas prices, auto sales, and e-commerce contributed to the rise, suggesting continued consumer spending and promising economic growth, albeit potentially complicating the Fed's rate cut plan.