Annual closings in Bakersfield, California, remained relatively flat in the second quarter, while annual starts continued to trend lower year over year and from the previous quarter.
Quarterly starts, however, jumped between the first and second quarters, and quarterly closings increased for the first time since the third quarter of 2022. Inventory under construction has increased to its highest number of units since the third quarter of 2007, and months of supply under construction have risen to a level just below their 17-year high of 8.8 months recorded in the first quarter of 2005.
Bakersfield has experienced a large year-over-year contraction in resale listings, and builders appear to be increasing construction to capitalize on this.
Strengths
Bakersfield's average new-home sales rate remained surprisingly strong entering the second half of 2023, continuing to outperform California and the nation. This comes even as the number of active projects is higher compared with the start of the year as well as year over year.
Weaknesses
Bakersfield has a high reliance on agriculture and energy industries. It is the center of California's oil industry, but new drilling permits have been paused due to ongoing litigation. Job growth has slowed this year, and both 2023 and 2024 are forecast to see annual job losses.
Supply
Quarterly housing starts decreased 10.4% from a year ago, while the number of available vacant developed lots sits at 2,101, up 6.3% over the same quarter last year. In terms of supply/demand balance, the market area is 5.91% undersupplied.
Sales
New-home sales in the metropolitan area decreased 3.2% year over year to an annualized rate of 1,492 units in July. Existing-home closings for the 12-month period ending in June posted a year-over-year decline of 32.2% to an annualized rate of 11,334 units.
Prices
The average list price for a new detached home in the region decreased 0.5% from 2022 to $434,883 in August. Homes priced under $250,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 24.4% in June.
Economy
Total nonfarm employment in the area increased 2.1% from the same period last year to 293,000 payrolls in June, with 300 more jobs compared with the previous month. The local unemployment rate decreased to 8.3% in June compared with 8.7% in the previous month. June's jobless rate is higher than it was this time last year when it stood at 6.5%. Zonda forecasts the region's unemployment rate will finish the year at 8.9%.
Community
The population for the Bakersfield metro area is approximately 915,580 people and is projected to increase by 0.5% this year. There are approximately 292,260 households in the region, which is down 0.1% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 3.6% for 2028. Incomes increased by 3.8% from the previous year to $62,841.
