Southern California Homebuying Slows in March Amid Rising Mortgage Rates and Record Prices

Southern California homebuying took a hit in March as a result of a perfect storm of rising mortgage rates and record-high prices. According to data released by CoreLogic, the six-county region saw a total of 14,176 completed sales, marking an 8% decrease from the previous year and the second-lowest March sales since 1988. The median sales price also reached a new peak at $753,000, up 1.8% from the previous month and 8% from the previous year.

Despite hopes for a rebound in homebuying at the start of the year, affordability issues caused by pricier financing and high prices kept many potential buyers out of the market. The increased mortgage rates, averaging 6.82% in March, were unexpected for many analysts who predicted a decline. This, coupled with the limited inventory of homes for sale, led to a sluggish sales momentum in March.

Homebuilders also experienced slow sales, with only 1,186 new homes purchased across Southern California in March. The high prices and rates translated to a typical monthly house payment of $3,935, making it challenging for many buyers to afford a home. Additionally, the limited options available for buyers led to bidding wars and further exacerbated the affordability challenges in the market.

Looking at homebuying by county, Los Angeles, Riverside, San Diego, Orange, San Bernardino, and Ventura all experienced varying degrees of sales activity and price increases. Despite the challenges faced in the market, there is hope that the situation may improve in the future as the industry continues to adapt to changing conditions.

Overall, the combination of rising mortgage rates and record-high prices has created a challenging environment for homebuyers in Southern California, leading to a slowdown in sales activity and affordability issues.