S.F. home sales hit record low in 2023

Fewer San Francisco homes sold in 2023 than any other year since at least 2005, with mortgage rate hikes and shifting buyer trends cooling the city’s market.

About 4,130 homes sold in San Francisco last year, according to a report from real estate company Compass. That count, which includes houses and condominiums, was the lowest of any year in the company’s data, which stretches back to 2005. The nextlowest total was in 2009, during the mortgage crisis, when roughly 4,645 homes sold.

Listings also reached a record low last year, with just 6,230 homes put up for sale. They had previously bottomed out at 6,630 in 2015.

Home values and sales plummeted in mid-2022 after mortgage rates spiked, with the housing market continuing to chill in early 2023.

While rates have since dipped slightly, they’re nowhere close to the record lows of 2022 that brought in a wave of buyers.

The housing market in expensive areas such as San Francisco is particularly sensitive to mortgage rate hikes, because even minor increases could translate to significantly higher payments. Higher rates also discourage homeowners who might otherwise sell their property from doing so, because many are currently paying a lower mortgage rate than they could get now.

San Francisco wasn’t the only place in the Bay Area where home sales dropped last year. Santa Clara and San Mateo counties, for example, both saw record low numbers of sales and listings, according to Compass reports.

But real estate agents have told the Chronicle that demand for homes remains high outside the region’s most dense cities, like San Francisco and Oakland, with the limited supply forcing buyers to outbid each other.

The same level of demand for homes wasn’t there in San Francisco last year. Its residences took longer to sell than in the rest of the state, sometimes prompting owners to lower their prices.

Home values in San Francisco and Oakland fell, while those in Fremont and Mountain View rose.

It’s too early to say whether San Francisco home buying will pick up substantially in 2024. Relatively few homes sell during the winter months, largely because buyers and sellers are focusing on holidays and travel. Fewer than 190 San Francisco homes sold in the four-week period ending Feb. 4, 2024, essentially the same number sold during the same period in 2023, according to data from real estate brokerage site Redfin.

Nationally, home sales followed a similar trend. About 4.1 million homes sold in the United States last year, the lowest count since 1995, according to the National Association of Realtors. The median home price also reached a record high, about $390,000.