Los Angeles Real Estate Market Update - August 2023
While sales of existing homes has fell over the last few months due to low inventory and high mortgage rates, the percentage of buyers expecting prices to fall has dipped, so motivation may increase as the prospect of higher interest rates and higher prices become more apparent.
Mortgage applications typically peak in the spring (April-June), which pushes closed sales up in the subsequent months as buyers find and close on properties giving way to our typical homebuying season. However, California’s homebuying seasons have been running deeper into the fall in recent years and we may continue to see stable or even rising home sales as we get near the 4th quarter.
Sales of existing homes in California continued to decline on a year-over-year basis for the 24th straight month in June but registered the smallest yearly drop since May 2022. Short supply and high mortgage rates continued to suppress home sales, while heated market competition remained the driving force that put upward pressure on home prices. As the market moves closer and closer to the end of the home buying season, the statewide median price is near its peak and will level off in July or August. IF interest rates start coming down in the next couple of months (that's a big IF), the market will see some improvement in affordability, which could help push sales up in the second half of the year.
Still, the housing market in California has maintained roughly 280,000 sales for four of the past five months after having fallen to 238,000 units in November of 2022. And despite rising rates and insurance challenges, housing inventory is still the biggest obstacle to higher sales volumes.
- Data from the California Association of Realtors