Lack of Inventory Blamed for Pending Homes Sales Decline

Low inventories and eroding affordability coupled with financial market volatility contributed to a second consecutive month of year-over-year declines for pending home sales statewide, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Pending home sales data:
  • Statewide pending home sales fell in February on an annual basis, with the Pending Home Sales Index (PHSI)* decreasing 0.4 percent from 121.4 in February 2015 to 120.9 in February 2016, based on signed contracts. 
  • On a monthly basis, California pending home sales increased 26.4 percent from January, well above the long-run average increase of 15.9 percent typically registered from January to February based on data collected between 2009 and 2015. Even after adjusting for typical seasonal factors, pending sales still rose 6.3 percent over January despite remaining below February 2015 levels. 
  • C.A.R.’s 2016 housing market forecast, released in October 2015, calls for a slightly slower pace of sales growth in 2016 than California experienced last year. Current pending sales figures suggest that tight inventories could begin to weigh more heavily on sales in coming months.
  • Regionally, pending sales increased significantly in month-over-month comparisons, but varied in year-over-year changes.
  • San Francisco Bay Area pending sales rose 36.3 percent from January to reach an index of 145.2 in February, up from January’s 106.5 index but down 13.6 percent from February 2015.
  • Pending home sales in Southern California declined 1.3 percent from February 2015, but increased 28.7 percent over January 2016 to reach an index of 97.7. 
  • Central Valley was the only region to see pending sales rise both year over year and month over month, which suggests that tight supply and affordability will continue to push more activity to less constrained, more affordable areas of the state. Pending sales in the Central Valley region rose 20.2 percent from January to reach an index of 87.5 and increased 6.7 percent from February 2015’s index of 82. 
Year-to-Year Change in Pending Sales by County/Region
 Feb. 2016
 Feb. 2015
 Year % Change
 Los Angeles
 San Francisco
 Santa Clara
 SF Bay Area
 So. CA
 Central Valley