Area Home Sales Defy Rate Hikes, Rise in August

Despite rising interest rates, the housing market showed new signs of strength in August, as both Southland home sales and the nationwide construction of new homes and apartments continued to grow.

A total of 27,736 new and resale homes and condos sold in Southern California last month, up 6.6% from August a year ago, according to Acxiom/DataQuick, a real estate information service.

Year-over-year sales had been climbing for four years but wobbled in July when interest rates began creeping up, eclipsing 8% in early August for the first time in more than two years.

Last month’s sales count not only signaled that buyers shrugged off the rising rates, but it was also the highest of any August this decade, according to John Karevoll, an Acxiom/DataQuick analyst.

“Interest rates will bump people out of the market when they’re close to the edge,” Karevoll said. “But right now buyers aren’t at the edge like they were 10 years ago.”

Interest rates for 30-year fixed-rate mortgages slipped to 7.64% on Friday, compared to 7.74% last week, according to Bankrate.com, which publishes nightly averages based on its survey of nearly 3,000 banks in 50 states.

Construction of new homes and apartments also defied analysts’ predictions of a dip by staying on an upward course, with a 0.4% increase over July, the Commerce Department reported Friday.

Bolstered by an increase in apartment building, construction rose in August to a seasonally adjusted annual rate of 1.68 million units.

“It’s a very strong number,” said Dan Sansbury, a survey statistician for the Bureau of the Census. “People were expecting lower numbers so some analysts see this as a good sign.”

Consequently, many economists are expected to revise their housing forecasts upward. The median price for a Southern California home rose 4.3% to $195,000 in August compared to the same month last year, according to Acxiom/DataQuick. The Southern California region includes Los Angeles, Orange, Ventura, San Diego, Riverside and San Bernardino counties. (The numbers for San Bernardino are estimated due to late data availability.)

Orange County was the only county to experience a year-over-year dip in sales last month, down 2.1% to 4,612. Riverside County experienced the strongest sales for the second month in a row, up 12% in August to 3,461.