California pending home sales shrank for the fourth consecutive month in October to the lowest level in six months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported on the eve of the Thanksgiving holiday.
Even with the home buying season winding down, REALTORS® reported slight increases in floor calls, open house traffic, and listing appointments/client presentations compared with a year ago, C.A.R.’s October Market Pulse Survey found.
Based on signed contracts, year-over-year statewide pending home sales dropped in October on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 2.6% from 119.1 in October 2016 to 116.0 in October 2017. California pending home sales were also down on a monthly basis, decreasing 3.3% from the September index of 120.0.
Pending home sales have declined on an annual basis for nine of the last 10 months so far this year. After a solid run-up of closed sales in May, June, and September, a continued scarcity of housing inventory, which drove up home prices, may squeeze the market heading into the closing months of the year.
At the regional level, the Central Valley Region recorded an increase in pending sales from the previous year. Within Central Valley, pending sales dipped 0.8% in Kern County and fell 6.6% in Sacramento County compared to a year ago.
The San Francisco Bay Area experienced the largest drop in pending sales, falling 10.5% from October 2016. San Mateo, Santa Clara and Monterey counties were all down by 10.9%, 21.4%, and 3.2%, respectively. San Francisco County was the anomaly with pending sales rising 15.1% from a year ago.
Pending home sales were down 7.3% from October 2016 in Southern California. Los Angeles and Orange counties registered lower annual pending sales of 4.7% and 4.9%, respectively. Double-digit, annual pending sales drops occurred in Riverside (14.0%), San Diego (11.4%), and San Bernardino (10.4%) counties.
C.A.R.’s Market Velocity Index – home sales relative to the number of new listings coming on line each month to replenish that sold inventory, or market indicator of future price appreciation – suggests that there continues to be upward pressure on home prices through the fall. Home sales continue to outstrip new listings coming online to restock sold units.
The Market Velocity Index rose from 40 in October 2016 to 75 in October 2017, implying that there were 75% more homes sold than new listings, meaning the supply of homes available for sale continued to drop.
