Southern California’s red-hot housing market continued to cool in July as rising home prices and higher interest rates discouraged homebuyers, new housing figures show.
The median price of a Southern California home was $530,000 in July. While that's up 5.8% from July 2017 levels, it was the weakest annual growth in 18 months, "a further sign of the continuing erosion of affordability," said CoreLogic analyst Andrew LePage.
"The combination of price increases and higher mortgage rates, which have climbed more than half a percentage point over the past year, means the mortgage payment on the median-priced home in Southern California has risen about 13 percent over the past year," he said.
Home sales, meanwhile, were flat, CoreLogic figures show, rising by a mere by 63 transactions to 21,277 closed sales in July. That's an increase of just 0.3% from July 2017 levels.
But because there was one extra business day last month, average daily sales fell 4.5% year over year. Average daily sales across the region fell on a year-over-year basis for a fifth straight month, CoreLogic figures show.
"While low inventory is still constraining sales in some areas, the overall trend in recent months has been toward more listings, suggesting that sales also remain weak relative to current housing demand because more and more would-be buyers are unable or unwilling to buy," LePage said.
Median home prices were up in all six Southern California counties, with appreciation rates ranging from 5.7% in Los Angeles County to 8% in San Diego County.
While the median was off from a record high of $537,000 in June, that's typical this time of year, reflecting the seasonal change as home shoppers divert their attention in the summer from house hunting to vacations and getting the kids ready to return to school. CoreLogic figures show Southern California prices fell from June to July in 19 of the past 31 years.
Still, market watchers say the fervor isn't as intense as it was over the past three years.
"In this area, the market is definitely slowing down," said Jim Lee, 51, of Whittier, who sold one home in July and bought a bigger one a couple miles away. "Houses stay on the market a little bit longer. Prices are being reduced."
Steve Thomas, author of the Reports on Housing market analysis, said housing is evolving from a brisk-paced, hot seller's market to a balanced market, where homes must be priced well or they will sit.
As a result, the number of homes on the market increased to nearly 46,000 homes for sale by Aug. 23. That's up nearly 7,100 listings (18%) from the same period last year.
A year ago, July escrows represented almost half of the homes on the market, Thomas' figures show. This past July, they represented little more than a third.
The housing market is "softening," California Association of Realtors Chief Economist Leslie Appleton-Young said in a recent report, referring to state as a whole.
"While home sales continued to decline in recent months, the softening of the market is more indicative of a market shift rather than a major market correction," Appleton-Young said.
