Rising interest rates and economic uncertainty dampened housing demand among prospective buyers in California last month, leading to a drop in home sales for the second straight month, according to a report from the California Association of Realtors.
Sales of existing, single-family homes fell 5.1 percent month to month and 2.6 percent year over year in September, to a seasonally adjusted annualized rate of 412,880. The state’s median home price fell on a monthly basis for the first time since February, by 2.8 percent, but nonetheless clocked in 24.4 percent higher compared to a year ago, at $428,810. That’s the 15th month in a row the state has posted double-digit price gains.
“The debate leading up to the expected tapering of the Fed’s stimulus program caused interest rates to rise over the past several months and might have put some of the housing demand on hold,” said CAR Vice President and Chief Economist Leslie Appleton-Young in a statement.
“While interest rates have decreased since the Fed’s decision last month to postpone the pullback, the government shutdown and debt ceiling discussions over the past two weeks are likely to have an adverse effect on October home sales.”
While for-sale home inventory has been improving since a bottom in May, months supply stood at 3.6 months in September, down from 3.7 months in September 2012. A six-to-seven month supply is considered normal, CAR said.