February Pending Home Sales

Despite generally improving demand conditions, pending sales continue decline

LOS ANGELES – March 24, 2015 – (RealEstateRama) — Low inventories and eroding affordability coupled with financial market volatility contributed to a second consecutive month of year-over-year declines for pending home sales statewide, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Pending home sales data:

• Statewide pending home sales fell in February on an annual basis, with the Pending Home Sales Index (PHSI)* decreasing 0.4 percent from 121.4 in February 2015 to 120.9 in February 2016, based on signed contracts. 
• On a monthly basis, California pending home sales increased 26.4 percent from January, well above the long-run average increase of 15.9 percent typically registered from January to February based on data collected between 2009 and 2015. Even after adjusting for typical seasonal factors, pending sales still rose 6.3 percent over January despite remaining below February 2015 levels. 
• C.A.R.’s 2016 housing market forecast, released in October 2015, calls for a slightly slower pace of sales growth in 2016 than California experienced last year. Current pending sales figures suggest that tight inventories could begin to weigh more heavily on sales in coming months.
• Regionally, pending sales increased significantly in month-over-month comparisons, but varied in year-over-year changes.
• San Francisco Bay Area pending sales rose 36.3 percent from January to reach an index of 145.2 in February, up from January’s 106.5 index but down 13.6 percent from February 2015.
• Pending home sales in Southern California declined 1.3 percent from February 2015, but increased 28.7 percent over January 2016 to reach an index of 97.7. 
• Central Valley was the only region to see pending sales rise both year over year and month over month, which suggests that tight supply and affordability will continue to push more activity to less constrained, more affordable areas of the state. Pending sales in the Central Valley region rose 20.2 percent from January to reach an index of 87.5 and increased 6.7 percent from February 2015’s index of 82. 

Year-to-Year Change in Pending Sales by County/Region

February REALTOR® Market Pulse Survey**:

In a separate report, California REALTORS® responding to C.A.R.’s February Market Pulse Survey saw an increase in floor calls, listing appointments/client presentations and open house traffic, and auctions indicating improved market conditions leading into the traditional spring/summer home buying season.

• Floor calls in February were at the second highest levels in the survey’s history. Listing appointments and client presentations also were reported to be near peak levels. Open house traffic hit the peak again in February at 77, which has not been reached since March 2015.

• Nearly one-third of homes (31 percent) closed above asking price in February, and 35 percent closed below asking price. The remaining 35 percent closed at asking price. 
• For the homes that sold above asking price, the premium paid over asking price edged up for the third straight month to an average of 11 percent, up from January’s 9.8 percent and up from 10 percent in February 2015. 
• The 35 percent of homes that sold below asking price sold for an average of 12 percent below asking price in February, a slight decrease from January’s 13 percent but up from 11 percent a year ago. 
• Seventy-five of properties received multiple offers in February up from 66 percent in January and 61 percent in February 2015.
• The average number of offers rose sharply from 2.1 in January to 3.1 in February. In February 2015, the average number of offers stood at 2.6.
• Sellers appear to be adjusting their listing price to better align with buyers’ expectations; however, the percentage of properties that experienced a price reduction rose slightly from 24 percent in January to 26 percent February. Compared with the previous year, the number of properties with price reductions declined from 31 percent.

• When asked what REALTORS®’ biggest concerns are, more than four in 10 (41 percent) said low housing inventory, while 14 percent indicated declining housing affordability, and 11 percent stated overinflated home prices. 
• REALTORS® continued to show optimism about this year’s housing market, with the vast majority expecting similar or better market conditions in 2016. The Index now stands at 64. An index above 50 indicates more REALTORS® are feeling positive than negative about market conditions.

Graphics (click links to open):

• Pending home sales by region.
• Share of homes selling at, below, or above asking price.
• Share of properties receiving multiple offers.
• REALTORS®’ market condition 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 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 of more than 300 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month and the last year.

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.