Higher interest rates, economic uncertainty cool California home sales and prices in September

LOS ANGELES (Oct. 17) – California home sales declined for the second straight month in September, following rising interest rates and economic uncertainty, which put the demand for housing on hold for buyers.  Meanwhile, housing supply conditions continued to loosen up as the housing market entered its off season, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported. 

“It’s encouraging that housing inventory has been steadily improving since May, when housing supply hit its recent bottom,” said C.A.R. President Don Faught.  “While inventory remains constrained in the lower-priced home segment and primary home buyers continue to compete with investors, the number of properties for sale overall has been rising since March 2013 and is at its highest level since mid-2012.”

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 412,880 units in September, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.  Sales in September were down 5.1 percent from a revised 434,910 in August and down 2.6 percent from a revised 424,000 in September 2012.  The statewide sales figure represents what would be the total number of homes sold during 2013 if sales maintained the September pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

The median home price declined in September for the first time since February but was still higher on a year-to-year basis.  The statewide median price of an existing, single-family detached home was down 2.8 percent from August’s median price of $441,330 to $428,810 in September.  September’s price was 24.4 percent higher than the revised $344,760 recorded in September 2012, marking the 15th straight month of double-digit annual gains.  The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.

“The debate leading up to the expected tapering of the Fed’s stimulus program caused interest rates to rise over the past several months and might have put some of the housing demand on hold,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “While interest rates have decreased since the Fed’s decision last month to postpone the pullback, the government shutdown and debt ceiling discussions over the past two weeks are likely to have an adverse effect on October home sales.”

Other key facts of C.A.R.’s September 2013 resale housing report include:

• The available supply of existing, single-family detached homes for sale rose in September to 3.6 months, up from August’s Unsold Inventory Index of 3.1 months. The index was 3.7 months in September 2012.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered typical in a normal market.

• The median number of days it took to sell a single-family home also increased to 29.6 days in September from 28.8 days in August, but was down from a revised 39.2 days in September 2012.

• Mortgage rates have been on the rise for the past five months, with the 30-year, fixed-mortgage interest rate averaging 4.49 percent, up from 4.46 percent in August 2013 and up from 3.47 percent in September 2012, according to Freddie Mac.  Adjustable-mortgage interest rates in September averaged 2.67 percent, up from 2.65 in August and up from 2.60 percent in September 2012.