Rising interest rates are continuing to affect the California housing market, as September home sales have now fallen for 15 straight months year over year.
It was the second time in the last three months that sales fell more than 30% from the previous year, according to the California Association of Realtors (CAR). The monthly 2.5 percent drop in sales was worse than the 43-year long-run average of 0 percent fall between August and September, according to the CAR report..
C.A.R. Vice President and Chief Economist Jordan Levine was pessimistic in the short term, saying, “September’s sales and price declines reaffirm our forecast for next year. High inflationary pressures will keep mortgage rates elevated, which will reduce homebuyers’ purchasing power and depress housing affordability in the upcoming year. With borrowing costs remaining high in the next 12 months, a pull-back in sales and a downward adjustment in home prices are expected in 2023.”
Conversely, statewide median home prices continued to increase on a year-over-year basis in September, but the growth rate remained comparatively very mild.
At an increase of 1.6 percent year-over-year, September is the fourth consecutive month with a single-digit annual increase, and the less-than-2-percent growth rate in the statewide median price was much lower than the 6-month average growth rate of 6.7 percent recorded between March 2022 and August 2022. The less than 2.1 percent month-to-month decline in September was also slightly lower than the long-run average of -1.8 percent recorded between any August and September in the past 43 years.
Meanwhile, according to a report by Norada Investments, sales in all price ranges fell by 25% or more year on year, with the sub-$300,000 price category decreasing the highest (36.7%).
Million-dollar house sales surprisingly plummeted by double digits for the fourth month in a row, though that market does remain relatively strong in some markets. Overall, the high-end market sector is down 25.6 percent from the same month last year.
In terms of monthly numbers, closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 305,680 in September. September’s sales dipped 2.5 percent on a monthly basis from 313,540 in August and were 30.2 percent from a year ago, which saw 438,190 homes sold on an annualized basis.
While California home prices increased on a year-over-year basis, the has slowed compared to earlier this year.
September’s statewide median home price was $821,680, the fourth consecutive month with single-digit yearly growth, with a 1.6 percent gain year over year. The statewide median price increase rate of less than 2% was much lower than the 6-month average growth rate of 6.7 percent recorded between March 2022 and August 2022.
