Wednesday, July 23, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Constrained inventory flattens home sales

By
From page HS6 | March 07, 2014 |

Pending home sales reverse two-month decline

LOS ANGELES — A limited supply of available homes for sale continued to hamper California housing sales, which were essentially flat in January, the California Association of Realtors recently reported.

“The underlying fundamentals for housing demand exists, however, constrained inventory is holding back a stronger recovery as affordability becomes an issue for current homeowners who are reluctant to move due to less attractive mortgage rates and more restrictive lending standards,” said CAR President Kevin Brown. “Supply conditions in the lower-priced segment were especially tight as inventory for homes priced below $300,000 fell 13.4 percent from the previous year, while inventory for homes priced $1 million and higher increased 11.1 percent from last year.”

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 363,640 units in January, according to information collected by CAR from more than 90 local Realtor associations and MLSs statewide. January marked the third straight month that sales were below the 400,000 level and the sixth straight decline on a year-over-year basis. Sales in January inched up 0.3 percent from a revised 362,430 in December but were down 13.8 percent from a revised 421,780 in January 2013. The statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The statewide median price of an existing, single-family detached home fell 6.2 percent from December’s revised median price of $438,090 to $410,990 in January. January’s price was 22.1 percent higher than the revised $336,650 recorded in January 2013, marking 23 consecutive months of year-over-year price increases and the 19th straight month of double-digit annual gains, as sales of higher priced homes made up a larger share of the market compared to a year ago. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.

“The decline in the January median price was the largest in a year but is typical between December and January, with that decline averaging nearly nine percent over the last six years,” said CAR Vice President and Chief Economist Leslie Appleton-Young. “The statewide median price was pulled down by a change in the mix of sales, as sales in higher-priced areas such as the Bay Area, Los Angeles, Orange, San Diego, and Ventura counties fell much sharper than in lower-priced areas.”

Other key facts from CAR’s January 2014 resale housing report include:

  • Housing inventory improved in January as home sellers geared up to sell their homes for the spring home-buying season.  The available supply of existing, single-family detached homes for sale rose in January to 4.3 months, up from December’s Unsold Inventory Index of three months. The index was 3.5 months in January 2013. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered typical in a normal market.
  • The median number of days it took to sell a single-family home also increased to 44.3 days in January, up from 40.2 days in December and from a revised 36.7 days in January 2013.
  • Mortgage rates dipped in January, with the 30-year, fixed-mortgage interest rate averaging 4.43 percent, down from 4.46 percent in December but up from 3.41 percent in January 2013, according to Freddie Mac.  Adjustable-mortgage interest rates in January averaged 2.55 percent, down from 2.56 in December and down from 2.58 percent in January 2013.

With the statewide housing inventory slowly improving, California pending home sales picked up steam in January and reversed a two-month decline, but pending sales were still down from a year ago.

“We’re starting to see a turning point in the market as we approach the spring homebuying season.  Home sellers realize that home prices are holding steady and are gearing up for the upcoming season by listing their homes for sale, while prospective home buyers are getting more comfortable with stabilizing home prices and interest rates and are entering the market,” said Brown.

Pending home sales data
California pending home sales posted higher in January, with the Pending Home Sales Index jumping 22.9 percent in January to reach 84.8, up from a revised index of 68.9 in December, based on signed contracts. Pending sales were down 17.5 percent from the revised 102.8 index recorded in January 2013. The year-over-year decline was the fifth straight annual double-digit drop in the PHSI. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data
 After reaching a recent high in November, the share of equity sales — or non-distressed property sales — was essentially unchanged in January, but still marked the seventh straight month that equity sales have been more than 80 percent of total sales. The share of equity sales in January dipped to 84.4 percent, down from 84.5 percent in December. Equity sales made up 64.2 percent of sales in January 2013.

Conversely, the combined share of all distressed property sales also was essentially unchanged in January.  The share of distressed property sales edged up from 15.5 percent in December to 15.6 percent in January. Still, distressed sales were down by more than a half from a year ago, when the share was 35.8 percent. About half of the 37 reported counties showed a month-to-month decrease in the share of distressed sales, with San Diego County having the smallest share at 4 percent.

Of the distressed properties, the share of short sales was 9.2 percent in January, down from 10 percent in December.  January’s figure was nearly half of the 21.2 percent recorded in January 2013 and remained at the lowest levels since January 2009.

The share of REO sales inched up in January to 5.9 percent from 5 percent in December. REOs made up 14.2 percent of all sales in January 2013.

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