Monday, October 22, 2012

Tight Inventory Hinders California Home Sales

Tight Housing Inventory Hinders California Pending Home Sales in September; Share of Equity Sales Reach Highest Level in Four Years, C.A.R. Reports

A continued lack of housing inventory constrained California pending home sales in September, while the share of equity sales reached its highest level in four years, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
Pending home sales data:
C.A.R.’s Pending Home Sales Index (PHSI)* fell 3 percent from a revised 119 in August to 115.4 in September, based on signed contracts. Pending sales were up 0.8 percent from the 114.5 index recorded in September 2011.

Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market. 

“It’s typical to see a drop in pending sales from August to September as the housing market transitions from the peak season to the slow season, so the month-to-month decline in the index is not unusual,” said C.A.R. President LeFrancis Arnold. “While it’s encouraging to see an improvement in equity and short sales from last year, a supply shortage continues to put a cap on sales, as housing inventory remains significantly below the 6- to 7-month supply we see in a balanced market. The REO market, in particular, was most affected by the lack of housing supply as both sales and inventory dropped nearly 60 percent from a year ago.”
Distressed housing market data:
  • The share of equity sales – or non-distressed property sales – compared with total sales grew to its highest level in four years. The share of equity sales in September increased to 63 percent, up from 62.2 percent in August. Equity sales made up about half (50.8 percent) of all sales in September 2011.
  • The share of REO sales statewide shrank further in September, while the share of short sales grew. The combined share of all distressed property sales slipped to 37 percent in September, down from 37.8 percent in August and down from 49.2 percent in September 2011.
  • Of the distressed properties, the share of short sales grew to 24.3 percent in September from 23 percent in August and from 21.5 percent a year ago.
  • In September, the share of REO sales contracted to less than half what it was a year ago to 12.3 percent, down from 14.4 percent in August and 27.5 percent in September 2011.
  • The available supply of REOs eased up in September but remains tight. The Unsold Inventory Index for REOs stood at 2.2 months in September. The Unsold Inventory Index for short sales was 3.9 months and was 3.8 months for equity sales.
Share of Distressed Sales to Total Sales

Type of Sale         Sept. 2011         Aug. 2012         Sept. 2012
Equity Sales         50.8 %         62.2 %         63.0 %
Total Distressed Sales         49.2 %         37.8 %         37.0 %
REOs         27.5 %         14.4 %         12.3 %
Short Sales         21.5 %         23.0 %         24.3 %
Other Distressed Sales
(Not Specified)
        0.2 %         0.4 %         0.4 %
All Sales         100.0 %         100.0 %         100.0 %

Single-family Distressed Home Sales by Select Counties
(Percent of total sales)

County         Sept. 2011         Aug. 2012         Sept. 2012
Alameda         NA         23%         28%
Amador         54%         40%         38%
Butte         42%         28%         36%
Contra Costa         NA         22%         29%
El Dorado         57%         43%         38%
Fresno         57%         47%         51%
Humboldt         19%         26%         28%
Kern         61%         47%        
Kings         NA         52%         39%
Lake         61%         65%         47%
Los Angeles         46%         36%         37%
Madera         65%         49%         60%
Marin         35%         25%         24%
Mendocino         41%         43%         47%
Merced         61%         59%         46%
Monterey         59%         44%         40%
Napa         51%         36%         37%
Orange         36%         27%         25%
Placer         55%         43%         43%
Riverside         60%         52%         50%
Sacramento         63%         52%         50%
San Benito         73%         60%         55%
San Bernardino         65%         49%         45%
San Diego         25%         17%         15%
San Joaquin         64%         56%         52%
San Luis Obispo         40%         30%         28%
San Mateo         26%         15%         20%
Santa Clara         35%         21%         22%
Santa Cruz         40%         28%         31%
Siskiyou         54%         31%         40%
Solano         73%         60%         59%
Sonoma         49%         32%         37%
Stanislaus         66%         57%         57%
Tehama         62%         62%         49%
Yolo         48%         36%         51%
California         49%         38%         37%

**Note: C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually becomes closed sales transactions one to two months later. The year 2008 was used as the benchmark for the Pending Homes Sales Index. An index of 100 is equal to the average level of contract activity during 2008. CALIFORNIA ASSOCIATION OF REALTORS® Lotus Lou, 213-739-8304

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