Los Angeles Real Estate Market Update Aug/Sept 2024

Buyer demand remains strong despite the usual seasonal slowdown: In California, home sales usually reach their peak during the summer months as buyers who initiated the buying process during the "homebuying season" finalize their transactions before the start of the school year. This year has followed the typical seasonal trend, with home sales starting to decrease before an expected increase next spring. Nonetheless, even with the seasonal fluctuations, there are indications of a resilient homebuyer demand. Mortgage applications from the previous week, although still decreasing, experienced the smallest decline of the year and the second smallest since interest rates began rising in 2022. Furthermore, pending sales in July reacted positively to the recent decrease in rates and are likely to lead to a strong homes sales report in August.

With rates dropping below 6.5%, there has been a positive response in the housing market. Apart from this, various other factors could contribute to a boost in California's housing market during the holiday season. The latest employment figures indicate that a softer economy might prompt the Fed to lower rates in the upcoming winter. Additionally, the presidential election could play a role. While statistical tests often do not confirm the impact of national elections on the market, there is anecdotal evidence suggesting that elections could lead to a slightly weaker fall housing market, followed by increased sales in winter as buyers who postponed their purchases until after the election re-enter the market. If inflation continues to improve, signs of weakness in the labor market appear in other indicators, and the post-election surge persists, California could experience an unusually robust winter season this year.