California Pending Home Sales Dip in April, Tight Housing Supply Persists

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According to the California Association of Realtors (C.A.R.), after posting a strong performance in March, California pending home sales slipped in April, but were higher than a year earlier for the twelfth consecutive month. Additionally, the share of equity sales posted its highest level in nearly four years.

Pending Home Sales

C.A.R.'s Pending Home Sales Index (PHSI) declined from a revised 138.9 in March to 128.0 in April, based on signed contracts.  The index was up from the revised 114.4 index recorded in April 2011, marking the twelfth consecutive 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.

"Inventory constraints could be a contributing factor to lower pending sales," said C.A.R. President LeFrancis Arnold.  "The tight inventory we've been experiencing in the distressed market over the past several months is now spreading to equity properties, essentially affecting the supply conditions of both the distressed and non-distressed markets."    

Distressed Housing Market Trends Include:

• The share of equity sales - or non-distressed property sales - compared with total sales increased to its highest level since July 2008 rising to 58 percent in April, up from 54.5 percent in March.  Equity sales made up 52.3 percent of all sales in April 2011.

• Conversely, the total share of all distressed property types sold statewide decreased in April to 42.0 percent, down from March's 45.5 percent and from 47.7 percent in April 2011.

• The share of short sales continued to decline in April.  Of the distressed properties sold statewide in April, 19.4 percent were short sales, down from March's share of 21 percent and only slightly higher than last April's share of 19.1 percent.

• The share of REO sales hit the lowest level in four years, declining in April to 22.3 percent, down from March's 24.1 percent and down from the 28.3 percent recorded in April 2011.