A cooler-than-expected summer homebuying season entered a deep freeze in September, with home sales falling to the lowest level in nine months.
Despite the lowest mortgage rates in half a year, consumers embraced a wait-and-see attitude about the rollercoaster-like economy and other matters, from the fight for the White House to the wars in the Middle East and Ukraine.
Amid the uncertainty, sales dropped to a seasonally adjusted annualized rate of 253,000 homes in September, a 3.4% decline from August but up 5.1% from a year ago, according to the California Association of Realtors. The seasonally adjusted annualized rate is how many homes would be sold over a one-year period at the current pace – or about 21,100 homes per month.
Five of the eight markets reported an increase in sales during the past year, with the Far North – from Chico to Eureka – and San Francisco leading the way at 7% and 5%, respectively. The Central Coast, Central Valley and Los Angeles experienced a decline in sales.
FALL BRINGS MORE HOMES BUT FEWER BUYERS
California’s seasonally adjusted annualized rate has been below the 300,000 threshold for the past two years. The 300,000 mark is considered the minimum number of sales for what housing experts say is a healthy market – enough homes for buyers but not too many to push down prices.
Blame cautious consumers and not a dwindling supply of homes on the market, officials say.
And as buyers hold off, home listings and the time to needed to sell them increase. The statewide unsold inventory index – how long it would take to sell every home on the market – increased to 3.6 months in September, almost a month longer than a year ago.
“Economic uncertainty and hopes for lower interest rates may have caused many buyers to hold off on a home purchase,” says Josh Levine, CAR senior vice president and chief economist.
‘FOURTH QUARTER COULD OFFER AN OPPORTUNITY FOR POTENTIAL BUYERS’
Active listings, the number of homes with signs in front, increased 36% in September from a year ago and have jumped for seven straight months – including double-digit gains in seven of those months.
“The inventory of homes for sale has steadily improved in recent months as the market moves into the typical off-peak homebuying season,” says CAR president Melanie Barker.
Affordability has been a concern for the past decade, with fewer than one of every four households able to buy the median-priced home during the second quarter, according to CAR. The statewide median home price dipped to $868,150 in September, down 2.3% from August and up 2.9% from a year ago.
The Inland Empire (Riverside and San Bernardino counties), the Central Coast and Central Valley had the biggest price increases from a year ago, while the Bay Area was the only region were prices fell (see table below).
The Bay Area was the most expensive of the eight regions at $1.27 million, followed by the Central Coast – from Santa Barbara to Santa Cruz – at $993,250. The Far North is the cheapest at $385,000.
“With home prices likely to moderate further in the coming months, the fourth quarter could offer an opportunity for potential buyers who have been waiting to re-enter the market, especially as interest rates gradually return to historical averages,” Barker says.
Home prices and sales in September compared to a year ago
| Region | Median home price | % gain or loss vs. a year ago | Home sales vs. a year ago |
|---|---|---|---|
| California | $868,150 | +2.9% | +5.1% |
| Bay Area | $1.27 million | -2.6% | +5.1% |
| Central Coast | $993,250 | +4.6% | -1.9% |
| Central Valley | $500,000 | +4.0% | -1.6% |
| Far North | $379,500 | -1.4% | +7.2% |
| Inland Empire | $579,990 | +5.5% | +0.1% |
| Los Angeles | $810,000 | +3.8% | -1.1% |
| Southern California | $850,000 | +3.7% | +1.1% |
Source: California Association of Realtors
