San Diego Home Sales Drop to 2nd Lowest Level in Nov Due to Mortgage Rates

The San Diego County housing market experienced a significant slowdown in November, recording the second-lowest number of sales in nearly four decades. This cooling trend is attributed to a slight increase in mortgage rates coupled with ongoing challenges in housing affordability.

Sales Volume Plummets

According to data released Tuesday by Attom Data Solutions, 1,913 homes were sold throughout San Diego County in November. This represents a substantial 22.4% decrease compared to the previous month. November typically sees lower sales activity, but this year’s figures were particularly weak, surpassed only by November 2023, which saw 1,779 transactions.

Did You Know? November 2024 marked the second-lowest month for home sales in San Diego County in almost 40 years of recorded data.

Multiple Factors at Play

Experts point to a confluence of factors hindering sales. A modest rise in mortgage rates, persistent difficulties in accessing housing, and increasing homeowner association (HOA) fees are collectively impacting potential buyers. Mark Goldman, a real estate analyst at C2 Financial Corp., noted that many prospective buyers are adopting a “wait-and-see” approach, hoping for lower mortgage rates – a strategy that could inadvertently drive up prices if demand surges.

Goldman also highlighted broader economic uncertainties surrounding the job market and wage growth as contributing to buyer hesitancy. “There’s nothing to drive improvement in the housing market,” he stated. “A lot of people are thinking, ‘It’s better to wait and see what happens.’”

Price Adjustments and Rate Concerns

The median price of a home in San Diego County decreased by 0.3% from the previous month, settling at $872,200. This figure represents a 0.1% year-over-year decline. The median price encompasses sales of single-family homes, townhouses, and condominiums.

While mortgage rates remain lower than a year ago, they experienced a slight uptick in November. Freddie Mac reported an average rate of 6.23% for 30-year fixed mortgages in the final week of November, up from 6.17% the prior week. Bill McBride, author of the Calculated Risk blog, believes significant rate decreases are unlikely in 2026, as mortgage rates generally track the yield on mortgage-backed securities, which in turn reflect the performance of U.S. Treasury bonds.

Expert Insight: The current economic climate, characterized by unpredictable factors like geopolitical events and inflation, introduces significant volatility into the housing market, making it difficult for potential buyers to confidently commit to large purchases.

External Factors and HOA Fees

A recent sell-off of U.S. government bonds, linked to President Donald Trump’s discussion of acquiring Greenland and imposing tariffs, further contributed to the rise in interest rates. Mortgage News Daily reported the average 30-year fixed mortgage rate climbed to 6.21% on Tuesday afternoon, up from 6.01% earlier in the week. McBride emphasized that job security concerns often outweigh the potential benefits of falling interest rates for many prospective homebuyers.

Beyond interest rates, rising homeowner association (HOA) fees are emerging as a new concern, particularly for first-time homebuyers. Raylene Brundage, a real estate agent in North County, noted that many young couples are being surprised by the high cost of HOA fees, which are increasing nationwide due to rising insurance premiums and inflation.

Regional Trends

San Diego County’s price trends mirrored those of Southern California as a whole in November. Here’s a snapshot of median prices across the region:

Los Angeles County: Increased 0.3% monthly to $888,000; up 1.5% annually.
Orange County: Decreased 3.6% monthly to $1.15 million; up 0.2% annually.
Riverside County: Remained unchanged monthly at $599,000; down 0.2% annually.
San Bernardino County: Increased 0.9% monthly to $525,000; down 3.7% annually.
San Diego County: Decreased 0.3% monthly to $872,200; down 0.1% annually.
Ventura County: $850,000 monthly; down 0.2% annually.

Frequently Asked Questions

What caused the drop in home sales in San Diego County in November?

A slight increase in mortgage rates, combined with ongoing challenges in housing affordability and rising HOA fees, contributed to the 22.4% decrease in home sales compared to the previous month.

Are home prices expected to continue falling in San Diego County?

It is difficult to predict with certainty. Analysts expect continued volatility, and further declines are possible if mortgage rates continue to rise or economic uncertainty persists. However, a surge in demand could also drive prices up if rates were to fall.

What is the impact of rising HOA fees on the housing market?

Rising HOA fees are creating a new affordability challenge, particularly for first-time homebuyers who may be surprised by the additional costs associated with owning a condominium or townhouse.

Given the current market conditions, how do you think potential homebuyers are weighing the risks and rewards of entering the market now?