New contract signings across Southern California dipped year-over-year in July, according to a Douglas Elliman report released Thursday.
In Los Angeles County, 4,374 single-family homes went into contract last month, a more than 2 percent decrease from July of last year — the first time the county’s single-family contract volume has tilted negative on a year-over-year basis since December.
The slight downturn is yet another sign of the region’s white-hot market, said appraiser Jonathan Miller, who authored the report.
“It’s not that demand is cooling,” he said. “It’s that sales listing inventory is collapsing.”
Last month, 3,154 single-family homes were listed in L.A. County, just over half the number of new listings in July 2020.
Buoyed by years of low mortgage rates and intense buyer demand throughout the pandemic, the county’s residential sales have been soaring. Just two weeks ago, a second-quarter Elliman report showed that L.A. had again notched new sales records, including an average Downtown and Westside price that had shot up 6 percent year-over-year to $2.8 million.
“What’s been happening in the last few months is that finally the collapse in listing inventory is restraining sales activity,” Miller said. “[The market] doesn’t have enough product to sell.”
That trend was even more pronounced in Orange County and San Diego County, which have also seen soaring pandemic-era residential and luxury markets. San Diego increased 23 percent year-over-year in May, according to the S&P CoreLogic Case-Shiller index.
In Orange County, 1,674 contracts were signed on single-family homes last month, a 19 percent drop from July last year. It was the second consecutive month in which contract volume dipped, according to the report, a figure that also reflected the county’s 22 percent year-over-year drop in new listings. New signed contracts on OC condos also declined 12 percent compared to July 2020, and condo listings fell 16 percent.
In San Diego County, last month’s single-family home contracts fell by 22 percent and condo contracts fell by 15 percent. Listings were down by 10 percent and 23 percent.
The broad trend of declining contracts did have one exception: L.A. County condos. Last month, the county saw 1,554 new condo signings, a massive 65 percent increase from July 2020. The trend was most pronounced among condos priced above $300,000, which saw sharp gains even as new condo listings in the county decreased year-over-year by 24 percent.
“There’s not a clear answer to it, other than LA has been hungry for this relatively new form of housing stock over the last five or six years, and this is just continued evidence of it,” Miller said.
The analyst also predicts signings will continue to tighten as inventory is increasingly overmatched by a “feeding frenzy” of demand, although the evolving Delta variant could potentially dampen the mood. “That’s the wild card at the moment,” he said.