Orange County Housing Report:

CAREFUL PRICING IS CRUCIAL

T H E  D A T A  D E M O N S T R A T E S  T H A T  I M P R O P E R   P R I C I N G 

R E S U L T S  I N  S E L L E R S  W A L K I N G  A W A Y  W I T H  L E S S 

M O N E Y A N D  M U C H  L O N G E R  M A R K ET TI M E S .

The active listing inventory increased by 179 homes over the past two weeks, up 5%, to 3,866. The Spring Market has arrived. More homes are placed on the market during the spring than any other season of the year. May is the top month for new sellers. The inventory will grow from week to week until it reaches a peak, typically during the summer between July and August. Many homeowners mistakenly think the market continues to heat up each week during spring. In fact, the market slows weekly during the Spring and Summer Markets due to increased seller competition. Last year, the inventory was at 3,681 homes, 5% lower, or 185 fewer. The year-over-year gap continued to narrow over the past couple of weeks. The 3-year average before COVID (2017 through 2019) was 5,533, an additional 1,667 homes, or 43% more Homeowners continue to “hunker down” in their homes, unwilling to move because of their current, underlying, locked-in, low fixed-rate mortgage. This trend has been easing from the lows established in 2023. Through February, 4,803 homes were placed on the market in Demand, a snapshot of the number of new pending sales over the prior month, increased from 1,639 to 1,654 in the past couple of weeks, up 15 pending sales, or 1%. It is the highest level since last year’s mid-March peak at 1,665, with only 11 additional pending sales. It appears demand is reaching, or may already have reached, its annual peak. Once the peak is established, demand will drop at an extremely slow rate, appearing nearly flat through September. Last year, demand was 1,649, with 5 fewer pending sales, nearly identical to today. The 3-year average before COVID (2017 to 2019) was 2,668 pending sales, 61% more than today,
or an additional 1,014. 
As the Federal Reserve has indicated, it is essential to watch all economic releases for signs of slowing. These releases can cause mortgage rates to rise or fall, depending on how they compare with market expectations. It is also important to monitor any
developments in the Iran conflict and its impact on the oil market, and ultimately inflation, which can also cause mortgage rates to rise or fall. This week is jobs week, which includes the number of job openings, wages, and the number of jobs created or lost, one of the month’s most important economic data points. In addition, retail sales will be released. Orange County, 1,383 fewer than the 3-year average before COVID (2017-2019), 22% less. In 2025, 5,041 homes entered the market (5% more), compared to 4,119 in 2024 (14% less), and 3,472 in 2023 (40% less). Slightly fewer homes have been coming on the market this year compared to last.

Excerpt from Stephen Thomas OC Housing