California September home sales fell to the lowest level for that month since 2007 as years of rising prices, combined with higher mortgage rates, created a one-two punch that knocked some would-be buyers to the sidelines, unable or unwilling to buy. The median sale price’s annual gain of 4.1 percent in September was the lowest for any month in more than two years.
An estimated 33,886 new and existing houses and condos sold statewide in September 2018 (Figure 1), down 21.9 percent from August 2018 and down 17.2 percent from September 2017, CoreLogic public records data show. The average change in sales between August and September since 2000 is a decline of 9.9 percent.
This September’s 17.2 percent annual sales decline was the largest for any month in nearly eight years, since sales fell 23.3 percent in October 2010. Sales have fallen year-over-year in four out of the last five months, with this July posting a gain of just 1.2 percent.
The Golden State’s housing slowdown stems not from a lack of underlying demand, given current economic and demographic trends, but from affordability constraints and a gradual shift in buyer psychology. The sense of urgency among many would-be buyers subsided in recent months as sales slowed and listings rose. Inventory – especially more affordable inventory – remains relatively tight in some markets but many areas have transitioned from a seller’s market to a neutral market where neither buyers nor sellers have a distinct advantage.
None of the state’s major regions escaped the September malaise. The San Francisco Bay Area, the Sacramento region, the Central Valley, the Central Coast and Southern California posted year-over-year sales declines from 15.5 percent to 18.9 percent. One caveat to last month’s sharp annual sales decline: This September had one less business day for recording transactions. Adjusting for that, the statewide year-over-year decline would be about 13 percent, still one of the largest in several years.
The median price paid for all new and existing houses and condos sold statewide in September 2018 was $485,000 (Figure 2), down 1.7 percent from August and up 4.1 percent from September 2017. In nominal terms the median hit an all-time high of $500,000 this June. Adjusted for inflation, however, the median has not returned to its pre-housing-bust peak in March 2007, and this September’s median was 16.3 percent below that peak.
The 4.1 percent annual gain in September’s median sale price (Figure 3) – the lowest for any month since June 2016 – understates the affordability challenge many would-be buyers face. In September, the monthly principal-and-interest mortgage payment on the median-priced home was up three times as much – 12.8 percent – year over year because of a roughly 0.8 percentage-point gain in mortgage rates over that period.
September home sales highlights for Southern California and the San Francisco Bay Area:
In September 2018, 17,369 new and existing houses and condos sold in the six-county Southern California region, down 17.7 percent year over year. September’s median sale price was $523,000, up 3.6 percent year over year – the smallest annual gain for any month in more than three years.
In the nine-county San Francisco Bay Area, 5,970 new and existing houses and condos sold in September 2018, down 18.9 percent year over year. September’s median sale price was $815,000, up 9.3 percent year over year – the smallest annual gain in 15 months.
 Because of late data availability, September 2018 sales were not complete in some counties.
 The San Francisco Bay Area comprises Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties.
 Sacramento region defined as Sacramento, Placer, El Dorado and Yolo counties.
Central Valley defined as Butte, Colusa, Fresno, Glenn, Kern, Kings, Madera, Merced, Sacramento, San Joaquin, Stanislaus, Sutter, Tehama, Tulare, Yolo, and Yuba counties.
Central Coast defined as Santa Barbara, San Luis Obispo, Monterey and Santa Cruz counties.
Southern California comprises San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties.
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