Southern California saw the slowest summer for home sales in four years.
June to August sales fell 6.8 percent year over year in the SoCal area, according to a new CoreLogic report. That covers Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura counties.
The slowdown was unusual. Year-over-year summertime sales have fallen just five times in the last 20 years, said Andrew LePage, a CoreLogic analyst. He pegged the slowdown on a lack of affordable inventory. Year-over-year sales in SoCal below $500,000 fell by 17.8 percent.
“The drop in affordability is the result of both price hikes and a significant rise in mortgage interest rates this year,” he said, adding that the monthly mortgage rate on a median-priced home jumped 16 percent since a year ago.
In L.A., exactly 700 fewer homes sold in August compared to a year earlier — an 8.5 percent drop in sales. Prices have continued to push up. The median sales price in August was $615,000, or 7 percent higher than in August 2017. While the lower ends of the market have seen a softening, the higher end of the market has continued to hold strong.
Some 7,497 homes sold in L.A. County last month, CoreLogic said. That was down year-over-year, but was 1.2 percent higher than July sales.
Rising interest rates have some buyers scrambling to buy now to lock in a lower rate. Interest rates are expected to climb in the near future thanks to hikes in the federal benchmarket lending rate.
CoreLogic released their report the same day that the Federal Reserve voted to hike the benchmark rate by another quarter-percentage point to between 2 and 2.5 percent. Federal officials cite a strong economy as a reason to raise rates, as higher rates help curb inflation.