After seeing the highest September sales pace in six years, Los Angeles housing fell into a deep sleep in October.
Home sales fell 0.4 percent compared with October 2014, according to CoreLogic. This is the first time in nine months that monthly sales have not been higher compared with a year earlier.
“Southern California home sales lost steam in October, dipping more than usual from September,” said Andrew LePage, research analyst with CoreLogic. “Sales remain constrained by a tight inventory of homes for sale and lower affordability.”
Tight inventory kept home prices on the rise. The median Los Angeles home price rose 5.8 percent from a year ago to $490,000. While higher mortgage rates are hitting housing now, these October sales are based on contracts signed in August and September, when rates were lower. It may be that strong sales in the first half of this year pulled demand forward.
“Flat is the new black,” said Madeline Schnapp, director of economic research for California-based PropertyRadar, a software and analytics company. “Sales posted healthy increases in the first half of 2015 relative to 2014 but beginning in July, sales weakened as rising prices began to meet resistance from prospective buyers. That scenario is unlikely to change anytime soon.”
While home sales slow in much of the country during the colder months, California can actually see higher demand, especially Southern California, thanks to its warmer climate.
“One of our busiest months has been December,” said Josh Altman, a real estate agent with Altman Brothers. “That is due in part to tax reasons but also because it’s a destination location.”
Altman says the high end market is still doing quite well, fueled by foreign buyers. The rest of the market is struggling under tight supply.
“There is a lack of good inventory. I think we’re going to see a lot of inventory hitting the market midway through next year in new developments,” he said.
California can be a leading indicator for the rest of the nation, simply due to its large population. Weaker sales there may not bode well for the colder months in colder territories.