Lower Interest Rates Influence Sales Volume

Lower Interest Rates Influence Sales Volume

Once again, The Federal Reserve has decided to ease interest rates as it tries to manage a soft landing while keeping inflation in check. Buyers are hoping for even more incentives ahead of jumping into purchasing mode more readily and may get it as the new year unfolds.

Within the metropolis of Santa Rosa, according to BAREIS MLS, Novembers’s data points to a marketplace executing on expected trend line levels as we anticipate a typical slower turn to it during the weeks ahead. Sellers debuted merely 64 new single-family homes in November – 50% fewer than last year and another all-time monthly low while the inventory of available homes in the greater Santa Rosa metro region stayed on par with last year at exactly 251 dwellings in December – meaning that the available supply of offerings has contracted from the levels it has been running at all year to fall in line with where it was just twelve months ago. Home seekers laid claim to 100 single-family homes during the past month – 19% fewer than last year at this same time – while sellers handed over keys on another 105 completed sales – just 2% less than the 107 abodes in 2023. 

Santa Rosa recorded a Months’ Supply of Inventory (MSI) level of 2.4 – continuing to affirm that sellers are exerting more influence on the marketplace than buyers. MSI is the metric that indicates the number of months it would take to sell the current inventory at the current rate of sales. An MSI ranging from 4.0 to 6.0 is indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.

Northeast Santa Rosa – the North Bay’s broadest submarket - saw the introduction of only 21 new single-family homes in November – a staggering 56% fewer than this same period a year ago. The supply of homes was met with increased demands from last year as there were 108 dwellings for house hunters to consider by months end – 12% less than in 2023. Buyers managed to absorb 31 homes into new contracts – 24% behind last year - with sellers receiving closing checks on another 36 properties – 5% fewer than a year earlier, highlighting an MSI of 3.0 once again. Keep in mind that in this submarket some of the new listings posted are offerings for homes under construction, which adds some unrealistic carryover inventory to what is actually available to purchase now, unlike most other sub-markets throughout Sonoma County.

Southeast Santa Rosa saw the supply of listed properties rest at 37 as December opened – 12% less than just a year earlier. This submarket saw the launch of only seven new listings in November – 71% fewer than last year’s figures - while buyers garnered accepted offers on 15 additional dwellings – 31% behind where pending contracts were in 2023 while witnessing 11 closings in the period resulting in MSI rising to 3.4.

Oakmont, which has experienced exacerbated demands from buyers steadily throughout the year, found sellers responding with a meager five new offerings in November. Buyers jumped in and grabbed 17 new deals while property owners collected 13 more closing checks leaving this region with 22 available homes for buyers to pursue in December along with an MSI steadying at 1.7.

Northwest Santa Rosa remained extremely active by all accounts. In November, buyers advanced to control 29 more deals while leaving 55 single-family homes available for sale at the beginning of December. Sellers committed 22 new offerings to the market in the period while 28 additional homes crossed the finish line, holding MSI at 2.0 – definitely still a sellers’ market.

Southwest Santa Rosa’s activity kept moving along as consumers placed eight dwellings into contract during the period - just as sellers handed over the keys to 17 new homeowners - leaving 29 homes for buyers to view at the outset of December and a market experiencing a stabilized MSI of 1.7.

Provided the trend of lower interest rates persists, this will draw more buyers into the marketplace in 2025 as they look to secure the future that many have put on pause over the prior 24 months. The sales volume equation will also be dependent just as much on the number of willing sellers that engage the market with their offerings and this level of participation will determine if we see prices remain where they are or rise based upon the resulting competition for each new offering introduced.