California Pending Home Sales Post Double-Digit Annual Gains in May

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According to the California Association of Realtors (C.A.R.), pending home sales in California were flat from April but posted double-digit gains from the previous year for the fourth straight month. Additionally, the share of distressed sales continued to decline from year-ago levels, signaling a return of non-investors to the housing market.

C.A.R.'s Pending Home Sales Index (PHSI)* was unchanged in May from a revised 128.8 in April, based on signed contracts.  The index was up from the 115.8 index recorded in May 2011.  May marked the thirteenth straight month that pending sales were higher than the previous year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

"Despite a slowdown in economic growth in recent months, sales in California remain strong as record low mortgage rates and favorable home prices continue to fuel demand in the housing market," said C.A.R. President LeFrancis Arnold. "The strong results in pending sales - double-digit year-over-year gains in the last nine out of 10 months - suggest solid housing market performance for the state in the upcoming months."

Distressed housing market data:

• The share of equity sales - or non-distressed property sales - compared with total sales improved further in May.  The share of equity sales rose to 59.3 percent in May, up from 55.8 percent in April.  Equity sales made up 51 percent of all sales in May 2011.Likewise, shares of REOs and short sales sold statewide decreased in May, with the share of REO sales dropping the most markedly from a year ago.  The combined share of all distressed property sales fell to 40.7 percent in May, down from April's 44.2 percent and from 49 percent in May 2011.
  

• The share of short sales declined in May to 19.4 percent, down from 20.6 percent in April and from 20.3 percent a year ago.

• Of the distressed properties, the share of REO sales declined further in May to 21 percent, down from 23.2 percent in April and 28.4 percent in May 2011.

• The available supply of REOs for sale continued to tighten in May, with the Unsold Inventory Index declining from a 2-month supply in April 2012 to 1.5 months in May 2012.