California pending home sales register higher in August but affordabilty and supply constraints remain concerns
An increase in pending sales across all major regions buoyed statewide California pending home sales in August from a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® said.
Uncertainty about market conditions was reflected in C.A.R.’s August Market Pulse Survey, with most leading indicators showing a decline in growth and REALTORS® becoming less optimistic about market expectations and more concerned with reduced affordability.
Making sense of the story
- Statewide pending home sales rose in August on a seasonally adjusted annualized basis, with the Pending Home Sales Index (PHSI)* increasing 6.4 percent from 113.9 in August 2015 to 121.3 in August 2016, based on signed contracts. The year-over-year increase was the fifth consecutive positive annual improvement and the largest in 2016. Despite the improvement, overall market conditions appear to be slowing down and closed transactions plateauing.
- On a month-to-month basis, California pending home sales slipped 1.0 percent from July’s index of 122.5 – the fourth consecutive decline, which was largely due to seasonality. The monthly decrease was the smallest July-to-August decline in four years, suggesting that sales may remain at similar current levels.
- Pending home sales in Southern California as a whole rose 9.7 percent from August 2015, thanks primarily to year-over-year pending sales increases of 15.5 percent in San Diego, 7.4 percent in Los Angeles County, and 3.0 percent in Orange County. Compared to July 2016, pending home sales were down 7.2 percent.
- For the Bay Area as a whole, pending sales rose 8.5 percent from August 2015 and 4.1 percent from July. A strong 14.8 percent increase in pending sales in Santa Clara County drove the improvement in the Bay Area, as well as double-digit pending sales gains in San Francisco (10.4 percent) and San Mateo (11.9 percent) counties.
- Overall pending sales in the Central Valley also performed well, posting a 7.1 percent annual increase and a 2.3 percent month-over-month gain. One exception for the region was Kern County, where pending sales have been dropping significantly due to a decline in oil prices and the economy’s reliance on the energy sector.