A shortage of available homes and robust price growth that’s eating away at affordability stifled pending home sales for the third straight month in March, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported Monday.
Based on signed contracts, statewide pending home sales decreased for the third straight month in March on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 4.5% from 112.5 in March 2016 to 107.4 in March 2017. On a monthly basis, California pending home sales dipped 2.9% from the February index of 110.6. March’s pending sales decline is the greatest so far this year, portending sales activity in the usually busy spring home buying season will be dampened, primarily due to demand outstripping the supply of active listings, which was 12% lower than in March a year ago.
At the regional level, Southern California remains the bright spot in the state, which led both in closed escrow sales in March and the smallest decrease (-1.3%) in March non-seasonally adjusted pending sales. In fact, Los Angeles and Riverside counties were the only two areas of Southern California that saw an increase in pending sales from a year ago, at 1.6% and 3.1%, respectively. Pending sales fell 3.6% from March 2016 in Orange County, 5.6% in San Diego County, and 8.0% in San Bernardino County.
The Bay Area pending sales index fell 10.1 percent from 179.2 in March 2016 to 161.0 in March 2017, down year-to-year for the sixth straight month, with every tracked county in the region experiencing a significant drop in pending sales activity. Monterey and Santa Cruz counties experienced the largest year-to-year reductions in pending sales of 17.3% and 16.4%, respectively. Pending home sales fell 15.9% from the previous year in San Francisco County, 14.9% in Santa Clara County, and 8.6% in San Mateo County.
Pending sales in the Central Valley Region fell 5.5% from 96.3 in March 2016 to 91.0 in March 2017. Within Central Valley, pending sales edged up 0.4% in Kern County while they were down 3.7% in Sacramento compared with a year ago.
In C.A.R.’s newest market indicator of future price appreciation, Market Velocity – home sales relative to the number of new listings coming on line each month to replenish that sold inventory – suggests the increase in prices continues to be a supply-driven phenomenon and that price growth should continue through the summer.
