High demand and thin housing supply crimp March California pending home sales

LOS ANGELES – April, 26 – (RealEstateRama) — Statewide pending home sales in California decreased in March on an annual basis for the third straight month, reflecting high demand for a dearth of homes available for sale on the market, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Pending home sales data:

• Statewide pending home sales fell in March on an annual basis, with the Pending Home Sales Index (PHSI)* decreasing 1.7 percent from 138.0 in March 2015 to 135.6 in March 2016, based on signed contracts.

• On a monthly basis, California pending home sales rose from February, primarily due to seasonal factors. The PHSI increased 12.7 percent from an index of 120.3 in February to 135.6 in March. When adjusting pending sales for typical seasonal patterns, pending sales actually declined 1 percent from February. Tight inventories are expected to continue to impede home sales growth this year.

• At the regional level, pending sales were down on an annual basis in all major regions of the state, with the San Francisco Bay Area experiencing the largest contraction at 3.7 percent. All major regions experienced double-digit, month-to-month increases in pending sales.

• Within the core areas of the Bay Area, including San Francisco and Santa Clara counties, pending sales actually saw an increase over last year of 8.6 percent and 11.6 percent, respectively.

• Conversely, the Central Valley, which has been enjoying the fastest pace of home sales growth of late, saw pending sales fall 3.5 percent from March 2015, but was up 11.7 percent from February.

• Pending home sales in Southern California were essentially flat in March, edging down 0.3 percent from a year ago and were up 17.8 percent from February. Los Angeles County posted a modest annual gain of 1 percent, while Orange County declined by 4.3 percent.

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

March REALTOR® Market Pulse Survey**:

In a separate report, California REALTORS® responding to C.A.R.’s March Market Pulse Survey saw an increase in floor calls and listing appointments/client presentations, indicating a solid start to the spring home-buying season. Floor calls and listing appointments both rose for the third consecutive month in March. Open house traffic was down slightly but has been in positive territory since the beginning of the year. Additionally, more homes are selling above asking price than below for the first time in the survey’s history.

The Market Pulse Survey is a monthly online survey of more than 300 California REALTORS®, which measures data about their last closed transaction and sentiment about business activity in their market area for the previous month and the last year.

• The share of homes selling above asking price in March rose to the highest level since July 2015 at 34 percent, indicating strong market competition for the thin supply of homes available for sale. Conversely, the share of properties selling below asking price shrank for the third straight month to a new low of 33 percent. The remainder (33 percent) sold at asking price.

• For the homes that sold above asking price, the premium paid over asking price declined for the first time in five months to an average of 9.8 percent, down from February’s 11 percent but up from 7.7 percent in March 2015.

• The 33 percent of homes that sold below asking price sold for an average of 9.6 percent below asking price in March, down from 12 percent in February and 11 percent a year ago.

• Half of the properties for sale received multiple offers in March, indicating the market remains competitive. Sixty-two percent of properties received multiple offers in March 2015.

• The average number of offers per property increased for the second straight month to 3.3 in March, up slightly from 3.1 in February and 2.7 in March 2015.

• With home prices leveling off in recent months, more sellers are adjusting their listing price to become more in line with buyers’ expectations. About one in five (21 percent) of properties had price reductions in March, down from 23 percent a year ago.

• Low housing inventory continued to be REALTORS®’ biggest concerns, cited by four in 10 (40 percent), while 18 percent indicated declining housing affordability, and 13 percent stated overinflated home prices.

• REALTORS® were largely optimistic about this year’s housing market, with the vast majority (83 percent) expecting similar or better market conditions in 2016.

Graphics (click links to open):

• Pending home sales by region.
• More homes selling at or above asking price.
• Number of multiple offers increasing.
• Lack of housing inventory #1 concern.
*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.