Key Market Takeaways
Inventory: Houses for sale dipped 8% YoY and 2% MoM, while condos for sale remained flat YoY and dropped 3% MoM, keeping overall supply tight across Los Angeles.
Sales & Escrow: Houses in escrow plummeted 19% YoY (-15% MoM) and condos in escrow dropped 16% YoY (-12% MoM), reflecting a real-time pullback from buyers due to rapidly rising mortgage rates.
Pricing: Median sale prices held steady (+2% YoY / -1% MoM for single-family homes; +1% YoY / +1% MoM for condos) because recent closed sales represent agreements signed when interest rates were lower.
House Data
Year-over-Year (YoY) | Month-over-Month (MoM) | |
Houses for Sale | -8% | -2% |
New Listings | -8% | +8% |
Houses in Escrow | -19% | -15% |
Closed Sales | -13% | -5% |
Median Sale Price | +2% | -1% |
Condo Data
Year-over-Year (YoY) | Month-over-Month (MoM) | |
Condos for Sale | FLAT | -3% |
New Listings | -4% | -2% |
Condos in Escrow | -16% | -12% |
Closed Sales | FLAT | +7% |
Median Sale Price | +1% | +1% |
DEEP DIVE: OCTOBER 2026 MARKET ANALYSIS
Prices held relatively steady, but since these are September numbers and the average escrow is 30 days, most buyers entered escrow in August, or even July, when mortgage rates were much lower. I get the feeling savvy buyers are still out there picking up condos at good deals, which is why condo numbers are holding steady.
Mortgage Rates & The Bond Market
The big news everyone is talking about is mortgage rates and how much they have increased in such a short time. Rates are close to 1.50% higher than twelve months ago. From September 1st until now, they have increased roughly .75%. That means buyers' monthly payments are roughly 7.5% higher than a month ago and about 15% higher than this time last year. That’s going to have a big impact on the market, as affordability was already being stretched when rates were in the 6%’s. To make matters worse, they have been rising almost every day. The odds of the Fed increasing the Fed Funds rate this month are low. However, the bond market appears to be marching to the beat of its own drum anyway, regardless of what the Fed is doing. Unless something unexpected happens between now and the rest of the year, expect rates to remain elevated for the foreseeable future. Especially given that the US has sent a third aircraft carrier to the Middle East, indicating that conflict will escalate after the midterms. To understand where mortgage rates are headed next, you have to look at the bond market.
Pending Sales & Homes in Escrow
Pending sales are the biggest indicator of how interest rates are affecting the market, with a big drop-off both YoY and MoM. This pullback is happening in real time, so there’s no need to wait for the October sales numbers. Double-digit declines, both MoM and YoY, show buyers are even less enthusiastic about the market than they were this time last year.
Buyer Strategies
Even though we are well and truly in a buyer's market on paper, don’t think prices are going to drop majorly just because buyers have more negotiating power due to rates. Plenty of sellers have rates much lower than today’s, and it will come down to whether they’re OK giving up that rate. In some cases, they won’t be able to afford a new home if they can’t get the price they want because of elevated rates. Therefore, you may have to submit multiple offers until you find a motivated seller. However, when you do find a motivated seller, this is a great time to scoop up a deal, as long as the monthly payments are comfortable for you. I can help you locate these motivated sellers if you have any on your radar.
Seller Strategies
If you truly need to sell, you have to be priced very competitively. Don't price your home based only on comps from the past six months. Factor in that buyers who bought those homes had much lower monthly payments than buyers in today’s market. You also need to focus on active comps, so you can stand out among homes that haven't been priced correctly. If you need help deciding whether it's worth bringing your home to market, I can give you an honest opinion on your home's value.
The Market Ahead
As with most of this year, there hasn't been a clear picture of the market. It's as though each home has been its own market within the market. Similar homes in the same area, sometimes even on the same street, can have different results because one is in a slightly better location, or maybe one home was styled a bit better. Or maybe the seller got really lucky and found a buyer who was sick of looking, so they paid more than anyone expected. Other times, a buyer uses an inexperienced or desperate agent, or an out-of-area agent who doesn't know the home's true value, and that seller gets lucky. These outlier sales make it even harder for sellers to understand why they need to price their home much lower than they want to.
The market has been somewhat mystifying at times, and, candidly, for us agents, it's been hard to have all the answers for our clients in such a fragmented market. However, good homes in good locations, priced correctly, will continue to sell fast and often get multiple offers. Some buyers will think the market is going to crash because of what's happening with mortgage rates and pull out of the market altogether. I highly doubt the market will crash, even though there'll be plenty of headlines saying it will. Again, it really depends on each specific property and what the result will be. I wouldn't be surprised if many sellers pull their homes from the market if they can't sell within the first month or so, and if that happens, expect an extended holiday season of very low inventory.
Condo Sellers & HOA Balcony Repairs
I keep hearing stories of condo deals falling through because the HOA hasn't been proactive in addressing SB 326-related balcony repairs, and those HOAs are now out of legal compliance. As a result, lenders are deeming HOAs that haven't completed the balcony repairs non-warrantable. This means a buyer can't get a standard mortgage. Even though the interest rate is sometimes not much higher than a standard mortgage, the term "non-warrantable" is scaring buyers away. Buyers who are okay with it may use it as leverage against sellers by making a bigger deal of it than they really are. However, in some cases, the fear is legitimate, as HOAs often don't have a clear financial plan for how the repairs will be handled, or the higher interest rate makes it unaffordable for the buyer.
Palisades Market Update
Anyone following the Palisades market recently may have noticed a change in recent sales data. An MLS error misclassified off-market land sales as single-family home sales, which artificially lowered average home prices and skewed land-sale statistics. The error has since thankfully been corrected.
Coming Soon Homes
I know of several new construction projects that will be finished by the end of the year. If you or someone you know is looking for a new construction house on the westside, reach out.
FAQS
Is the Los Angeles housing market going to crash due to rising mortgage rates?
No. I highly doubt the market will crash, even though there will be plenty of headlines predicting it. Double-digit drops in pending sales demonstrate buyer hesitation, but low seller inventory and strong foundational home equity continue to support pricing overall.
How much have mortgage rates increased, and how does it affect monthly payments?
Significantly. Rates are close to 1.50% higher than twelve months ago and up roughly 0.75% since September 1st. As a result, buyers' monthly mortgage payments are about 7.5% higher than last month and about 15% higher than this time last year.
Why are condo sales falling through due to HOA balcony repairs?
Non-warrantable loan status. HOAs that have not proactively addressed balcony inspections under SB 326 are falling out of legal compliance. Mortgage lenders classify these developments as non-warrantable, preventing buyers from securing standard home financing.
