Sacramento Housing Market Update and Forecast Into 2024

Back in 2021, the Sacramento metro area became one of the so-called pandemic boomtowns, with many new residents relocating in from elsewhere across the state.

Relatively low home prices and plenty of open space attracted home buyers from California’s pricier coastal markets, and from elsewhere across the country. As a result, inventory levels plummeted and home prices rose at a record pace.

But by the second half of 2022, the Sacramento real estate market was ranked as one of fastest-cooling markets in the country. According to a March 2023 report from the national real estate brokerage Redfin:

“Austin, TX cooled fastest over the last year as the U.S. housing market descended from its pandemic-era boom … Austin is followed by Seattle, Phoenix, Tacoma, WA and Denver. Las Vegas, Stockton, CA, San Jose, CA, Sacramento, CA and Oakland, CA round out the top 10.”

Which brings us up to the present. As of early summer 2023, the Sacramento-area real estate market appears to be heating up again. Inventory levels have declined since the start of this year, and homes are selling faster than a year ago

Here are the latest trends and developments within the Sacramento, California housing market, with a forecast extending into 2024.

Sacramento Housing Market Update: Summer 2023

From red-hot to cool to warm. That’s the best way to sum up how the Sacramento real estate market has changed over the past three years or so. After cooling down and slowing for most of last year, this market now appears to be accelerating with faster sales and more offers above the asking price.

The main reason for this? Inventory decline.

According to a June 2023 report from Realtor.com, the Sacramento real estate market experienced a significant decline in real estate listings over the past year. In fact, among the nation’s 50 largest metro areas, Sacramento had one of the largest year-over-year decreases in property listings.

From June 2022 to June 2023, the total number of active real estate listings within the Sacramento metro area declined by more than 33%. During that same timeframe, new listings declined by around 31%. This means that there are fewer homes for sale overall compared to a year ago, and also fewer new homes coming onto the market these days.

To quote the June 2023 Realtor.com report:

“Active inventory decreased in 28 out of 50 of the largest metros compared to last year. Western markets reported the largest yearly declines, with the top three in California metros: San Jose, (-44.1%), San Diego (-35.9%), and Sacramento (-33.4%).”

When inventory levels drop within a housing market, we tend to see a faster pace of home sales as well. Limited supply increases competition among buyers, leading to more offers and faster sales. And that’s currently what’s happening within the Sacramento-area real estate scene.

Homes Are Selling Faster in 2023

There are several ways to measure the overall pace of a real estate market. And in this context, we are talking about how quickly homes are selling, on average. One way to measure this is by looking at the median number of “days on market,” or DOM.

During the pandemic, the median DOM for the Sacramento real estate market dropped significantly. With home buyers flooding in from other parts of the country, the real estate market accelerated resulting in faster sales.

But in 2022, the median DOM began to rise again as the housing market cooled down. That same trend played out in most cities across the country, and rising mortgage rates had a lot to do with it.

Now, however, the “days on market” indicator is falling once again. During the first six months of 2023, the median DOM for the Sacramento real estate market dropped from 43 days to only 10 days. Basically, this shows that homes are selling faster now than they were at the start of this year. In other words, the market is accelerating again.

More Homes Selling Above Asking Price

Another noteworthy trend within the Sacramento real estate market has to do with sale prices. According to the latest MLS data and other sources, the percentage of homes sold above the asking price has risen sharply since the start of 2023.

That percentage dropped during 2022, as the housing market cooled down. But now, it seems that more and more buyers are offering more than the asking price.

In January 2023, roughly 20% of homes sold within the Sacramento metro area ended up selling for more than the asking price. But by June, that percentage had shot up to more than 50%.

Forecast for the Sacramento Housing Market Into 2024

Home prices across the Sacramento metro area declined during the first few months of 2023. But the rate of that decline appears to be slowing, suggesting that prices might “bottom out” during the second half of 2023.

Looking beyond that, Sacramento real estate market forecasts suggest that prices could begin rising at a more moderate pace later this year and into 2024.

The inventory situation, meanwhile, could continue to challenge local home buyers for the foreseeable future. Something significant would have to change for inventory levels to rise.

A decline in mortgage rates could bring more sellers into the market, easing their concerns about giving up their current low rates. But housing analysts from Freddie Mac recently predicted that mortgage rates would essentially “move sideways” over the coming months.

In other words, current housing market conditions in Sacramento could remain the status quo for the rest of this year. As for 2024, it seems likely that home prices will rise at a pace more in keeping with historical norms.