Following a brief bounce back in August, rapidly rising mortgage rates slowed California home sales in September and resumed the month-to-month declining trend that began in the spring, the California Association of Realtors reported.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 305,680 in September, according to the association.
“The statewide annualized sales figure represents what would be the total number of homes sold during 2022 if sales maintained the September pace throughout the year,” the report states. “It is adjusted to account for seasonal factors that typically influence home sales. September’s sales pace was down 2.5% on a monthly basis from 313,540 in August and down 30.2% from a year ago, when 438,190 homes were sold on an annualized basis.”
According to the association, home sales have dipped for 15 straight months on a year-over-year basis, and it was the second time in the last three months that sales dropped more than 30% from the year-ago level.
As previously reported here by the Betsy Hamilton Real Estate Team, western Nevada County saw September sales slide 10.8% down from August, but there were actually 5.8% more homes sold locally year-over-year than the same month in 2021.
That slight increase, however, wasn’t enough to shift the downward trend over the third quarter, which saw a 13.6% decrease in volume sold locally from the third quarter of 2021 and were down 8.2% from the second quarter of this year.
“With interest rates rising rapidly since the beginning of the year, buyers and sellers are having difficulties adapting to the market’s new ‘normal,’” said C.A.R. President Otto Catrina, a Bay Area real estate broker and REALTOR®. “As the market continues to evolve in the next 12-18 months, Realtors will be playing an ever-more important role as trusted advisors to guide their clients through the complicated buying and selling process and help them overcome their obstacles during these challenging times.”
The statewide median home price continued to increase on a year-over-year basis in September, the association reported, but the growth rate remained very mild compared to those observed earlier this year. At an increase of 1.6 percent year-over-year, September marked the fourth consecutive month with a single-digit annual increase. 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 -2.1 percent month-to-month decline in September was slightly lower than the long-run average of -1.8 percent recorded between an August and a September in the past 43 years. With mortgage rates rising and the average 30-year FRM approaching 7 percent in the past week, home prices will drop further in the coming months as affordability remains a challenge.
“September’s sales and price declines reaffirm our forecast for next year,” said C.A.R. Vice President and Chief Economist Jordan Levine. “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.”
Read the California Association of Realtors’ full report here:https://www.car.org/aboutus/mediacenter/newsreleases/2022releases/sept2022sales
Source: California Association of Realtors