(Bloomberg) -- The pace of California home sales plunged 21% in June from a year earlier as soaring mortgage rates took a bite out of buyer interest, the state Realtors group reported Monday.
It was the biggest drop since California’s three-month pandemic lockdown in 2020, the California Association of Realtors said. If excluding the early Covid-19 lockdown, June’s sales were at the lowest level since April 2008, when a housing bubble was bursting after subprime mortgages dried up for borrowers with limited ability to repay their debts.
Transactions throughout the US have been slowing for months as mortgage rates almost doubled since early January. The sales decline in California, which has the nation’s costliest housing markets, marks a turn toward moderation from recent feverish price increases and frenzied bidding wars.
“With inflation remaining high and interest rates expected to climb further in the coming months, the market will normalize further in the second half of the year, with softer sales and more moderate price growth,” CAR Chief Economist Jordan Levine said in a statement.
Single-family home prices in the most populous state fell to a median of $863,790 in June, down 4% from the all-time high of $900,170, set in May. Prices were still 5.4% higher than a year earlier. Other signs pointing to a cooldown include fewer pending sales, a growing inventory of available homes and a shrinking share of deals closing above the asking price.
Consumers were downbeat in June, according to a CAR survey that found 79% of respondents believed economic conditions in California won’t improve in the next 12 months, while 85% believed interest rates won’t fall within a year.
The drop in sales hit most regions and price points and is expected to last through this year. The group projects 380,630 single-family home sales this year, a decline of 14% from the 444,520 units sold in 2021.
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