Pending home sales in California soared in July compared to the previous year, posting the strongest year-over-year increase in more than six years, the California Association of Realtors (CAR) reported today.
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The data comes from the Pending Home Index, which looks at properties whose sales are expected to close in 30 to 60 days. The index offers an idea of what lies ahead for home sales. The numbers are rising after low sales last year, which were linked to a lack of inventory in the market.
Even so, the CAR noted there were also signs of a possible, coming decline in real estate activity. California Realtors, responding to the state’s July Market Pulse Survey, saw a reduction in floor calls, listing appointments, and open house traffic, compared with June. The Market Pulse Survey is a monthly survey of over 300 California-based realtors, and measures data about their last closed transactions and sentiments about business activity in their market area for the previous month and the last year.
July’s Pending Home Sales Index jumped 17 percent from a year ago to 122.3, based on signed contracts. The July 2015 index was up from the 104.5 index recorded a year ago and marked the eighth straight month of year-to-year gains and the sixth straight month of double-digit advances.
Statewide pending home sales in July also reversed a three-month decline, rising 1.6 percent on a month-to-month basis. The month-to-month increase was higher than the average June-July loss of 2 percent observed in the last seven years.
Pending home sales in Southern California were essentially flat, dipping 0.3 percent in July from June, but up 16.8 percent from a year ago.
Meanwhile, the share of equity sales, or non-distressed property sales, increased in July to its highest level since late 2007. Equity sales made up 93 percent of all home sales in July, up from 92.4 percent in June and 90.2 percent in July 2014.
Conversely, the combined share of all distressed property sales (REOs and short sales) fell in July to 7 percent of total sales, down from 7.6 percent in June and 9.8 percent a year ago.
Twenty-two of the 43 counties that CAR reports on showed month-to-month decreases in their share of distressed sales, with San Francisco having the smallest share of distressed sales at 1 percent, followed by San Mateo (1.6 percent), and Alameda (2.1 percent), CAR said. Solano County had the highest share of distressed sales at 24 percent, followed by Mendocino (18 percent) and Siskiyou (17 percent).
CAR also reported today that the share of sales closing below asking price was unchanged in July, remaining at 43 percent. More than a third of homes — 34 percent — closed above asking price, and 24 percent closed at asking price, CAR said.
For the one in three homes that sold above asking price, the premium paid over asking price remained at an average of 11 percent, unchanged from June but up from 11 percent in July 2014, and the 43 percent of homes that sold below asking price sold for an average of 9.6 percent below asking price in July, down from 11 percent in May, according to CAR.
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