Southern California Housing Market Sees Decline in Sales and Prices Due to Rising Mortgage Rates

The Southern California housing market took a hit in September as rising mortgage rates continued to impact both sales and prices. According to real estate data firm CoreLogic, the median price of a Southern California home dropped to $725,000, down 1.4% from August levels. Home sales also fell to one of the lowest levels in 36 years, with just 13,051 transactions recorded in September.

The surge in mortgage rates, averaging above 7% for the first time in 22 years, has led to a slowdown in home buying activity. Economists predict that the housing market will remain tepid in the coming months due to the lack of affordability caused by the high mortgage rates.

Despite the downward pressure on prices and sales, the number of homes for sale has slightly increased, providing buyers with more options and easing the competition that drove up prices. However, the overall trend for 2023 is on track to be the slowest year in CoreLogic records, with just 125,971 homes changing hands in the region through September.

The impact of rising rates is evident in the decrease in buying power for potential homebuyers. The typical house payment for a median-priced Southern California home totaled $3,936 a month in September, down just $3 from the previous month. The number of homes listed for sale has also increased, giving buyers more choices but remaining below the average inventory levels.

Overall, the Southern California housing market is facing challenges due to the combination of falling affordability and rising mortgage rates. While home prices are not expected to plummet, the market is likely to see continued sluggishness in the coming months.