3rd Look at Local Housing Markets in September, California Sales off 30% YoY

This is the third look at local markets in September. I’m tracking about 35 local housing markets in the US. Some of the 35 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

We are seeing a sharp decline in closed sales, and inventory is up significantly year-over-year. Also, new listings are down as the sellers’ strike continues. The increase in inventory so far has been due to softer demand because of higher mortgage rates.

California Home Sales Down 30% YoY in September, Prices Decline, Inventory “Surges”

California doesn’t report monthly inventory numbers, but they do report the change in months of inventory. Here is the press release from the California Association of Realtors® (C.A.R.): Rising interest rates depress September home sales and prices, C.A.R. reports

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 305,680 in September, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2022 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. September’s sales pace was down 2.5 percent on a monthly basis from 313,540 in August and down 30.2 percent from a year ago, when 438,190 homes were sold on an annualized basis. …

The statewide median home price continued to increase on a year-over-year basis in September, but the growth rate remained very mild compared to those observed earlier this year. At an increase of 1.6 percent year-over-year, September marked the fourth consecutive month with a single-digit annual increase. … The -2.1 percent month-to-month decline in September was slightly lower than the long-run average of -1.8 percent recorded between an August and a September in the past 43 years. With mortgage rates rising and the average 30-year FRM approaching 7 percent in the past week, home prices will drop further in the coming months as affordability remains a challenge. …

Housing supply in California improved from a year ago and was unchanged in September from the prior month despite a decline in housing demand. The statewide Unsold Inventory Index (UII) was 2.9 months in September 2022 from 1.9 months a year ago. With closed sales dropping more than 25 percent and pending sales falling over 40 percent, active listings have been staying on the market significantly longer, which contributed to a surge in for-sale properties by 51.5 percent in September.

emphasis added

Active Inventory in September

Here is a summary of active listings for these housing markets in September.

Active inventory in these markets were down 31% YoY in January and are now up 47% YoY! So, this is a significant change from earlier this year, and this is a larger YoY increase than in August (up 44% YoY for these markets).

Notes for all tables:

1. New additions to table in BOLD.

2. Northwest (Seattle), Santa Clara (San Jose), Jacksonville, Source: Northeast Florida Association of REALTORS®

3. Totals do not include Atlanta, Denver or Minneapolis (included in state totals)

   

New Listings in September

And here is a table for new listings in September. For these areas, new listings were down 13.9% YoY. The sellers’ strike (buyers locked in with low mortgage rates) has slowed the increase in active inventory.

Last month, new listings in these markets were down 10.1% YoY.

Closed Sales in September

And a table of September sales.

In September, sales were down 24.0% YoY Not Seasonally Adjusted (NSA) for these markets.

Here is a table comparing the year-over-year Not Seasonally Adjusted (NSA) declines in sales this year from the National Association of Realtors® (NAR) with the local markets I track. So far, these measures have tracked closely, and the preliminary data below suggests a sharp decline in sales in September.

Note that in September 2022, there were the same number of selling days as in September 2021, so the SA decline will be similar to the NSA decline. Last month, in August 2022, there was one more selling day than in August 2021.

NOTE: Housing economist Tom Lawler expects the NAR to report sales of 4.82 million SAAR for September (the NAR reports this coming Thursday).

Sales in some of the hottest markets are down around 30% YoY (all of California was down 30%), whereas in other markets, sales are only down in the teens YoY.

Closed sales in September were mostly for contracts signed in July and August when 30-year mortgage rates averaged about 5.3%. Rates increased to around 6% in September and that will impact closed sales in October and November. In early October 30-year rates have jumped to over 7% - likely impacting closed sales in November and December.

More local markets to come!