Rising mortgage rates cause 18 percent drop in Los Angeles home sales

Mortgage rates exceeding seven percent led to an 18 percent decrease in existing home sales in the Los Angeles metro area compared to the same month last year, The Korea Daily reported. Data from real estate platform Zillow shows that the decline in Los Angeles significantly exceeded the national average sales reduction of 8.7 percent. [1]

Other major Southern California housing markets recorded similar contractions, according to The Korea Daily. Home sales in San Diego dropped by 17.2 percent, while sales in Riverside fell by 16.8 percent. All three regions recorded sales declines roughly double the national average rate. [1]

On November 6, Norada Real Estate Investments reported that the 30 year fixed mortgage rate fell back below seven percent for the first time since September. Standard fixed-rate mortgages typically amortize over 15 to 30 year terms, replacing earlier short-term variable-rate loans that often required balloon payments and down payments exceeding 50 percent. [2][4]

The market downturn follows national trends seen earlier in autumn. As FTMQ Real Estate reported earlier, United States pending home sales dropped four percent month over month in September to levels not seen since 2014, excluding April 2020, as mortgage rates climbed past seven percent. [5]