California pending home sales expand in October

LOS ANGELES (Nov. 23) – (RealEstateRama) — Led by the Southern California region, California statewide pending home sales grew modestly in October from the previous year and were down from September as the market begins its seasonal cooldown, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

California’s housing market showed signs of cooling competition with fewer price reductions and properties receiving multiple offers dropping for the seventh straight month, as reflected in C.A.R.’s October Market Pulse Survey**.

Pending home sales data:

• Based on signed contracts, statewide pending home sales increased in October on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* rising 1.5 percent from 117.3 in October 2015 to 119.1 in October 2016 – the seventh consecutive year-to-year increase. On a monthly basis, California pending home sales were down 6.7 percent from the September index of 127.7.

• At the regional level, for Southern California as a whole, pending sales rose 2.4 percent on a monthly basis, reversing a three-month decline. On an annual basis, pending sales were up 6.8 percent in the region. Los Angeles, Orange, and San Bernardino counties posted healthy year-over-year increases of 5.2 percent, 19.1 percent, and 6.7 percent, respectively.

• For the San Francisco Bay Area as a whole, pending sales were 4.7 percent lower than September and 11.6 percent lower than October 2015, as housing affordability continues to deteriorate amid the region’s skyrocketing home prices. San Francisco, San Mateo, and Santa Clara counties all experienced significant annual declines in pending home sales of 21.2 percent, 5 percent, and 12.5 percent, respectively.

• Overall pending sales in the Central Valley declined from both the previous month and year, posting a 23.8 percent monthly drop and a 4.8 percent annual decrease.
Year-to-Year Change in Pending Sales by County/Region

* Seasonally adjusted

October REALTOR® Market Pulse Survey**:

California REALTORS® responding to C.A.R.’s October Market Pulse Survey reported a decline in floor calls and listing appointments, which was expected as seasonal factors typically lead to a decrease in market activity this time of year.

• The share of homes selling above asking price edged up from 27 percent a year ago to 28 percent in October. Conversely, the share of properties selling below asking price dropped to 44 percent from 47 percent in October 2015. The remaining 28 percent sold at asking price, up from 25 percent in October 2015.

• For homes that sold above asking price, the premium paid over asking price rose to 9.1 percent, up from 7.7 percent in September and 8.9 percent a year ago.

• The 44 percent of homes that sold below asking price sold for an average of 8.9 percent below asking price in October, the lowest since May 2015. The premium paid in both September and a year ago was 12 percent.

• Nearly six in 10 properties for sale (59 percent) received multiple offers in October, down from 63 percent in September and 64 percent from October 2015. October marked the seventh straight month of declining multiple offers.

• The share of properties receiving three or more offers fell to 30 percent, the lowest level since the beginning of this year. Thirty-five percent of properties received three or more offers in September, and 36 percent of properties received three or more offers a year ago.

• Compared to a year ago, there was an increase in the share of homes receiving three or more offers in homes priced $400,000 to $499,000 and $2 million and higher, while the share of low- to mid-priced homes experienced a decrease in three or more offers, particularly in homes priced $300,000 to $399,000, which dropped the sharpest – from 43 percent in October 2015 to 18 percent in October 2016.

• About a third (31 percent) of properties had listing price reductions in October, up from 25 percent in September and down from 32 percent in October 2015.

• Nearly half (45 percent) of REALTORS® were concerned about high home prices and housing affordability, while 26 percent indicated they were concerned about a lack of available homes for sale. REALTORS® also were concerned about a slowdown in economic growth, lending and financing, rising interest rates, and policy and regulations.

• REALTORS®’ optimism of market conditions over the next year has been trending downward for the past few months but is still in positive territory at an index of 54 in October, unchanged from September but down from 57 in October 2015.

Graphics (click links to open):

• YTY change in pending home sales by region.
• Fewer properties selling below asking price.
• Two-thirds of homes received multiple offers.
• Price range of homes receiving 3+ offers.
• Affordability, lack of supply tops REALTORS®’ concerns.

*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 become 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.