California pending home sales slipped for the sixth consecutive month in June, suggesting an impending slowdown in the state's housing market as the peak home buying season winds down, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)said Monday.
With increasing concerns over shrinking housing inventory and suppressed housing affordability, REALTORS® remained cautious in June, C.A.R.'s latest Market Pulse Survey** found. REALTORS® reported fewer floor calls and listing appointments but higher open house traffic than in May.
Based on signed contracts, year-over-year statewide pending home sales fell for the sixth straight month in June on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 0.9 percent from 119.0 in June 2016 to 117.9 in June 2017. California pending home sales also slipped on a monthly basis, decreasing 0.6% from the May index of 118.7.
Pending home sales have declined every month so far this year, however, the pace of decline has slowed in recent months. But with additional headwinds of housing inventory that declined further last month as closed sales rose, and a double-digit drop in active listings, the state's housing market could be negatively impacted in the coming months, C.A.R. warned.
Pending sales in the Southern California Region continued their upward trend in June and posted a 2.5% improvement from the previous year, as San Bernardino County and Orange County saw healthy bumps of 10.3% and 8.3%, respectively. Pending sales in San Diego (-3.6%), Riverside (-6.9%), and Los Angeles (-1.7%) counties declined from last June.
The Central Valley also posted a healthy pending sales gain in June, rising 5.2% from a year ago. Kern County saw its first significant increase (5.7%) in pending sales for the year after battling with the after-effects of precipitous declines in the energy markets.
The San Francisco Bay Area experienced a dip in pending sales in June, nudging down 0.6% on an annual basis. San Francisco County reversed last month's double-digit pending sales decline and rose 22.2%, while San Mateo and Santa Clara counties posted pending sales decreases of 10.1% and 0.4%, respectively as inventories remained extremely low and median prices exceeded $1 million.
In C.A.R.'s newest market indicator of future price appreciation, Market Velocity Index – home sales relative to the number of new listings coming on line each month to replenish that sold inventory – indicates that price growth will continue to accelerate, potentially back into double-digit territory, as it reached its highest level since 2013. At an index of 71.0, there were far more home sales than new listings to restock statewide inventory, leading to a deterioration in the number of active listings. With demand still running high, the elevated pace of home sales will likely persist through the fall.
