Southern California home sales tumbled 7.5 percent in October from a year earlier, extending a broad slowdown in the housing market, according to a report released Thursday by CoreLogic.
Last month was the third straight month of declines and the 20,752 homes that sold were the lowest for an October since 2011, before the housing market took off on its multi-year upswing.
Real estate agents trace the sale declines to buyers that are increasingly tapped out by a combination of rising mortgage rates and years of steady price hikes. Buyers that can afford to pay more could fear investing money at what might be the top of the market.
As a result, homes are sitting longer and more sellers are scaling back ambitions.
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Seventeen percent of L.A. County listings on Zillow had at least one price cut in October, the greatest percentage in at least eight years. The number of listings was up 30.5 percent.
So far, the cooling is just that: a pull-back from a red-hot housing market, not a full drop-off.
The median home price in the six-county Southern California region rose 6.1 percent from a year earlier to $525,000, CoreLogic said. In Los Angeles County, the median – the point where half the homes sold for more and half for less – increased 5.3 percent to $595,000. In Orange County, 3.9 percent to $720,000.
Gains, however, are slowing.
According to the Case-Shiller index, which is a better gauge of price trajectory than the median, the year-over-year price increase in L.A. and Orange counties equaled 5.5 percent in September, the latest month available. That rate has declined each month since reaching a recent peak of 8.2 percent in April.
In San Diego County, price gains eased from 7.7 percent to 4 percent during the same period.
Many economists doubt prices will decline on a year-over-year basis absent a recession. Others disagree, arguing prices are simply too out of whack with incomes.
It's not just California. Buyers nationally are adjusting to mortgage rates that are nearly one percentage point higher than a year earlier as the Federal Reserve raises interest rates to stem inflation.
On Thursday, the National Assn. of Realtors said that, on a seasonally adjusted basis, buyers entered contracts to buy nearly 3 percent fewer homes in October than September. Compared to a year earlier, contact signings fell 6.7 percent – the tenth straight decline.
In response to that report, Mike Fratantoni, chief economist for the Mortgage Bankers Assn., called the current slowdown a "healthy deceleration in the market."
"Home prices had galloped ahead of wage growth for too long, particularly in the coastal markets," he said in a statement.