California pending home sales stall for third straight month in September, C.A.R. reports

LOS ANGELES, Oct. 24, 2017 /PRNewswire-USNewswire/ -- California pending home sales dwindled for the third consecutive month, suggesting that the housing market will slow as the end of the year winds down, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Entering the fall home-buying season, the housing market momentum waned as REALTORS® reported slower open house traffic, and listing appointments and client presentations fell below positive territory in September, C.A.R.'s September Market Pulse Survey** found.

Pending home sales data:

• Based on signed contracts, year-over-year statewide pending home sales dropped in September on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 6.0 percent from 127.7 in September 2016 to 120.0 in September 2017. California pending home sales increased on a monthly basis, rising 2.5 percent from the August index of 117.0.  
• Pending home sales have declined on an annual basis for eight of the last nine months so far this year. After a solid run-up of closed sales in May, June, and August, continued housing inventory issues and affordability constraints may have pushed the market to a tipping point, suggesting the pace of growth will begin to slow in the fall.
• All of the major regions recorded a decrease in pending sales from the previous year, with the San Francisco Bay Area experiencing the largest drop in pending sales, falling 10.8 percent on an annual basis. San Mateo, Santa Clara and Monterey counties were all down in double-digits of 22.4 percent, 23.5 percent, 16.9 percent, respectively. Pending sales in San Francisco County inched up 2.8 percent.
• Pending home sales were down 7.1 percent from the previous year in Southern California. Los Angeles, Riverside, and San Diego counties registered lower annual pending sales of 8.0 percent, 13.4 percent, and 11.5 percent, respectively. Orange County experienced its first year-to-year pending sales decrease (2.8 percent) in six months, and San Bernardino County posted its first annual decline (11.6 percent) in four months.
• The Central Valley region experienced a nominal 0.6 percent annual pending sales decline,  led by a 16.8 percent annual decrease in Sacramento County, while Kern County recorded a 5.2 percent decrease from last September.
• 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 dipped from 53 to 52, implying that there were 52 percent more homes sold than new listings, meaning the supply of homes available for sale continued to drop.

Year-to-Year Change in Pending Sales by County/Region

* Seasonally adjusted

September REALTOR® Market Pulse Survey**: 

• The share of homes selling above asking price dipped from 31 percent a year ago to 29 percent in September, while the share of properties selling below asking price fell from 40 percent to 28 percent, the lowest since C.A.R. began reporting this figure in 2014. The remaining 43 percent sold at asking price, up from 29 percent in September 2016, the highest since 2014, suggesting that more sellers have adjusted their pricing expectations.
• For homes that sold above asking price, the premium paid over asking price rose from 8 percent in September 2016 to 13 percent in September 2017.
• The 28 percent of homes that sold below asking price sold for an average of 15 percent below asking price in September compared to 12 percent a year ago.
• About two-thirds (63 percent) of properties sold in September received multiple offers, unchanged from September 2016, and the number of offers received was up slightly at 2.7 offers in September 2017 compared to a year ago.
• The share of properties receiving three or more offers in September was 41 percent compared to 35 percent a year ago.
• In a reverse of a months-long trend, market competitiveness increased the most in higher-end homes compared with last year. Seventy-five percent of homes priced $750,000-$999,999 received three or more offers, up from 33 percent a year ago, and 69 percent of homes priced $1 million-$1,999,999 received three or more offers, up from 41 percent in 2017.  
• Listing price reductions edged up from 25 percent a year ago to 26 percent in September.
• Declining housing affordability/inflated home prices/rising interest rates was the top concern of more than 4 in 10 (44 percent) REALTORS® compared with 47 percent a year ago. More REALTORS® cited a lack of available homes for sale as their top concern at 35 percent in 2017 compared with 25 percent last September. A slowdown in economic growth, lending and financing, and policy and regulations rounded out REALTORS®' remaining biggest concerns.
• REALTORS®' expectations of market conditions over the next year dipped from 54 a year ago to 52 in September but is still in positive territory.

Graphics (click links to open): 

• YTY change in pending home sales by region.
• Pending sales vs. closed escrow sales.
• Homes selling at asking price at record high.
• Premium price paid rises to peak.
• Market competition increases in higher end segment.
• Market Velocity – indicator of future price appreciation.

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*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 become 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.

**C.A.R.'s Market Pulse Survey is a monthly online survey sent to more than 10,000 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month. Nearly 300 REALTORS® responded.

Leading the way...^® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS^® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

SOURCE CALIFORNIA ASSOCIATION OF REALTORS