MORTGAGE COSTS TANK HOME SALES
Transactions drop 23% as loan benchmark hits high not seen since 2000
Rising mortgage rates continued to dampen Southern California's housing market, causing sales and prices to fall in September.
The median price of a Southern California home — or the price at the midpoint of all sales — dipped to $725,000 in September, real estate data firm CoreLogic was expected to report today.
While that's up slightly from the September 2022 median (when home prices were slumping), it's down 1.4% from August levels.
Home sales, meanwhile, fell to one of the lowest levels in 36 years of records.
“As mortgage rates surge to new highs not seen in more than two decades, home sales are … likely to remain tepid for the next few months,” said Jordan Levine, chief economist for the California Association of Realtors. “Housing affordability will continue to hinder sales activity for the rest of the year.”
September transactions totaled just 13,051, down 22.5% from the year before and down almost 17% from August levels. That's the six-county region's second-lowest sales tally for a September in records dating back to 1988.
Based on the first nine months of 2023, it's on track to be the slowest year in CoreLogic records.
September's housing market got caught in the vice of falling affordability and rising mortgage rates, putting even more downward pressure on buyer demand. “Rates rise, values slip,” said Steven Thomas, author of the bimonthly Reports on Housing.
Home prices “are not going to plunge,” Thomas said in his latest YouTube video: “But with rates as high as they are right now, there's some extra pressure … for values to come down a little bit.”
At the same time, the number of
homes for sale ticked upward a bit, as is normal for this time of year. That, in turn, eased the buyer competition that created upward pressure on home prices.
Here are highlights from the latest housing report:
• Median home prices dipped from August in five of the region's six counties. Los Angeles County was the only area with a one-month price gain in September.
• September's median was $25,000 below the all-time high of $750,000, reached in April 2022.
• September was the 22nd straight month that Southern California home sales have fallen on a year-overyear basis. September's tally of 13,051 home sales was the 16th lowest of the past 429 months.
• The pace of homebuying in 2023 is on track to be the slowest since CoreLogic began tracking sales in 1988. Just 125,971 houses, condos and townhomes have changed hands in the region this year through September. That's the smallest tally for the January-through-September period on record.
• This year's sales tally so far is 38% below the 36-year average of 202,374 transactions.
• Rising rates are cutting in the home shopper's buying power, pricing more people out of the market. The interest rate for the popular 30-year fixed mortgage averaged 7.2% in September, according to Freddie Mac. That's the highest monthly average since December 2000.
• A typical payment for a median-price Southern California home totaled $3,936 a month in September, down just $3 a month from the alltime high of $3,939 in August, when the median was $10,000 more.
• The typical Southern California home shopper lost just over $86,000 in buying power over the past year due to rising mortgage rates. A payment of $3,936 a month would have been sufficient a year earlier to buy an $811,200 home — vs. $725,000 paid to buy a median-priced home last month.
• The number of homes for sale edged up slightly in recent months, giving buyers more options and reducing upward pressure on home prices.
As of Sept. 12, the region had just over 23,500 homes listed for sale, according to Reports on Housing. That's up 27% in six months.
• Still, for-sale inventory remains about 36% below the October average of about 37,000 listings.
• Much of last month's trends is seasonal. Prices typically drop or level off from August to September as families shift away from house hunting. And for-sale inventory typically rises in the summer and fall, and this year's increase is only slightly above average, Reports on Housing figures show.
Here's a county-by-county breakdown of median home prices and sales, with annual percentage changes:
• Los Angeles County's median rose 4.6% to $837,000; sales were down 22.8% to 4,117.
• Orange County's median rose 9.9% to $1.05 million; sales were down 17.7% to 1,871.
• Riverside County's median fell 2.2% to $547,500; sales were down 20.6% to 2,544.
• San Bernardino County's median fell 3% to $480,000; sales were down 22.1% to 1,926.
• San Diego County's median rose 5.1% to $830,000; sales were down 25.8% to 2,101.
• Ventura County's median rose 5.9% to $810,000; sales were down 32.6% to 492.