Led by the San Francisco Bay Area, California pending home sales continued their upward momentum in June to post three straight months of annual increases, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said Monday.
The California housing market remained very competitive, as C.A.R.'s June Market Pulse Survey reflected a slight increase in sales with three or more offers over the previous year, particularly in homes priced $300,000-$399,000, which climbed from 8% in June 2015 to 18% this year.
Statewide pending home sales rose in June on an annual basis, with the Pending Home Sales Index (PHSI) increasing 3.2% from 123.4 in June 2015 to 127.3 in June 2016, based on signed contracts. With pending sales on a rising trend in the past couple of months, June's increase should portend for higher closed transactions in July and August.
California pending home sales declined 7.0%on a monthly basis compared to May, primarily due to seasonal factors. When adjusting pending sales for typical seasonal patterns, pending sales were down 3.2% from May and up 3.0% from June 2015.
After trailing behind Southern California and the Central Valley since the beginning of this year, the San Francisco Bay Area led the regions, with pending sales increasing on an annual basis across the state.
For the Bay Area as a whole, pending sales were up 5.1% from June 2015 and down 16.3% from May. The June increase in Bay Area pending sales suggests a brighter outlook for the region, which had been trailing behind 2015 in closed sales, primarily due to low affordability and tight inventory. An improvement in housing supply during recent months – especially in Alameda, San Francisco, San Mateo, and Santa Clara counties – should alleviate low housing stock in the upcoming months.
Pending home sales in Southern California as a whole rose 3.2% from June 2015 and 1.3% from May, thanks to year-over-year gains of 5.5% in Los Angeles County, 4.1% in San Bernardino County, and 1.3% in San Diego County. Orange County experienced a 6.0% decrease from the previous year.
Pending sales in Central Valley posted a gain of 2.6% from the previous year and were down 9.3% on a month-to-month basis.
In a separate study, California REALTORS® responding to C.A.R.'s June Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, indicating slowing market activity. In a reflection of a slowing market, the proportion of homes selling above asking price declined in June.
After reaching an all-time high of 38% in May, the share of homes selling above asking price in June dropped to 35%, but was up from 33% a year ago. Conversely, the share of properties selling below asking price rose to 37% from 34% in May. The remainder (28%) sold at asking price.
For the homes that sold above asking price, the premium paid over asking price rose for the first time in three months to an average of 11%, up from 9.4% in May but was unchanged from a year ago.
The 37% of homes that sold below asking price sold for an average of 11% below asking price in June, which was up from 10% in May but unchanged from a year ago.
More than seven of 10 properties (72%) for sale received multiple offers in June, indicating the market remains competitive. 65% of properties received multiple offers in June 2015.
The average number of offers per property dipped slightly to 3.0 in June, compared with 3.1 in May and 2.9 in June 2015. Nearly one-half (47%) of properties received three or more offers in June. Homes priced between 300,000-$399,000 and $500,000-$999,000 saw the greatest increase in three or more offers compared to a year ago.
More than one in five (22%) properties had price reductions in June, down from 23% in May. Twenty-one percent of properties had price reductions in June 2015.
Low inventory, declining housing affordability, and high home prices were the top concerns for about two-thirds (68%) of REALTORS®.
While still in positive territory, REALTORS®' optimism of market conditions over the next year has been waning over the past few months, with the index decreasing to 52, down from 54 in May and 64 in June 2015.