California pending home sales post fourth straight annual increase in July, C.A.R. reports

Steady sales shows signs of strength, portending fall improvement in market

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Aug 23, 2016, 10:30 ET

LOS ANGELES, Aug. 23, 2016 /PRNewswire-USNewswire/ -- Led by the Southern California region, California statewide pending home sales continued to build momentum in July, posting an increase from both the previous month and year, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Despite an increase in pending sales, California's housing market showed signs of cooling competition with fewer buyers overbidding on homes, as reflected in C.A.R.'s July Market Pulse Survey**. The survey results indicate a decrease in the premium paid over asking price and the percentage paid below asking price reaching its high level.

Pending home sales data:

Statewide pending home sales rose in July on a seasonally adjusted annualized basis, with the Pending Home Sales Index (PHSI)* increasing 3.5 percent from 118.4 in July 2015 to 122.5 in July 2016, based on signed contracts. Pending sales have been on a rising trend for the past couple of months, which should translate into an increase in closed transactions in the fall.
On a month-to-month basis, California pending home sales were up 3.0 percent from June's index of 119.0.
At the regional level, Southern California pulled up the market with a year-over-year increase in pending home sales, while the San Francisco Bay Area reversed its gain last month. Pending sales in the Central Valley were essentially flat.
Pending home sales in Southern California as a whole rose 1.6 percent from July 2015, thanks primarily to year-over-year pending sales increases of 7.8 percent in Orange County and 7.5 percent in San Diego County. Compared to June 2016, pending home sales were down 1.8 percent.
For the Bay Area as a whole, pending sales were down 3.5 percent from July 2015 and down 3.8 percent from June, despite year-to-year increases in pending sales in San Francisco (20.6 percent) and San Mateo (3.6 percent) counties. Low affordability and limited housing supply has been plaguing the region, however, an improvement in inventory in recent months should alleviate low housing stock in the upcoming months.
Pending sales in Central Valley were essentially flat, down just 0.1 percent from the previous year but up 1.9 percent on a month-to-month basis.

Year-to-Year Change in Pending Sales by County/Region
County/Region/State	July 2016	July 2015	Yearly % Change
Counties
Kern	73.2	94.0	-22.1%
Los Angeles	83.3	86.6	-3.8%
Monterey	72.6	59.7	21.6%
Orange	75.9	70.4	7.8%
Sacramento	81.0	80.4	0.7%
San Bernardino	71.8	72.2	-0.6%
San Diego	141.4	131.5	7.5%
San Francisco	85.3	70.7	20.6%
San Mateo	107.1	103.4	3.6%
Santa Clara	94.1	103.7	-9.3%

Regions
San Francisco Bay Area	143.3	148.5	-3.5%
Southern California	111.5	109.7	1.6%
Central Valley	102.9	102.9	-0.1%

California*	122.5	118.4	3.5%
* Seasonally adjusted

July REALTOR® Market Pulse Survey**:

In a separate study, California REALTORS® responding to C.A.R.'s July Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, which was expected as seasonal factors typically lead to fewer market activities at this time of year.

After reaching an all-time high of 38 percent in May, the share of homes selling above asking price in July dropped to 34 percent, unchanged from a year ago. Conversely, the share of properties selling below asking price slipped to 36 percent from 43 percent in July 2015. The remaining 30 percent sold at asking price, up from 24 percent in July 2015.
For homes that sold above asking price, the premium paid over asking price fell to 7.8 percent, down from 11 percent in June and 11 percent from a year ago.
The 37 percent of homes that sold below asking price sold for an average of 14 percent below asking price in July, which was up from 11 percent in June and 9.6 percent a year ago. The July 2016 figure was the highest since C.A.R. began tracking this statistic in 2014.
More than six in 10 properties (66 percent) for sale received multiple offers in July, down from 72 percent in June and 67 percent in July 2015, indicating a slight cooling in market competition.
The average number of offers per property dipped slightly to 2.8 in July, compared with 3.0 in June and 3.0 in July 2015. Forty-four percent of properties received three or more offers in July, down from 47 percent in June. Homes priced between 300,000 - $399,000; $500,000 -$749,000; and $1 million - $1.99 million saw and increase in three or more offers compared to a year ago.
In a sign of cooling home prices, more than one in four (26 percent) properties had price reductions in July, up from 23 percent in June. Twenty-eight percent of properties had price reductions in July 2015.
Low inventory, declining housing affordability, and high home prices were the top concerns for about two-thirds (70 percent) of REALTORS®.
While still in positive territory, REALTORS®' optimism of market conditions over the next year has been waning over the past few months, with the index hovering at 52, unchanged from June and down from 60 in July 2015.

Graphics (click links to open):

*Note: C.A.R.'s pending sales information is generated from a survey of more than 70 associations of REALTORS^® and MLSs throughout the state. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually becomes closed sales transactions one to two months later. The year 2008 was used as the benchmark for the Pending Homes Sales Index. An index of 100 is equal to the average level of contract activity during 2008.

**C.A.R.'s Market Pulse Survey is a monthly online survey sent to more than 10,000 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month. Approximately 300 REALTORS® responded.

Leading the way...^® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS^® (www.car.org) is one of the largest state trade organizations in the United States with 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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SOURCE CALIFORNIA ASSOCIATION OF REALTORS