California Realtors Report Pending Home Sales Lose Steam in July

Residential News » North America Residential News Edition | By WPJ Staff | August 26, 2014 12:26 PM ET

According to the California Association of Realtors (C.A.R.), despite ultra-low interest rates, California's real estate market continued to underperform in July 2014, with pending home sales posting lower for the fourth straight month. At the same time, equity home sales improved further, as both short sales and REO sales continued to decline.

C.A. R. Pending Home Sales Data for July 2014:

California pending home sales fell in July, with the Pending Home Sales Index (PHSI) dropping 2.3 percent from 107 in June to 104.5 in July, based on signed contracts. The month-to-month drop was consistent with seasonal trends.

Pending sales were down 9.2 percent from the 115.1 index recorded in July 2013. Pending sales have been down year to year since October 2012, but the pace appears to be decelerating as the decrease in July was smaller than the average in the last six months. 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:

The share of equity sales - or non-distressed property sales - continued its upward trend, inching up in July to 90.6 percent, up from 90.3 percent in June. Equity sales have been rising steadily again since the beginning of this year. Equity sales have been more than 80 percent of total sales for more than two years and have risen above 90 percent for the second straight month. Equity sales made up 82.8 percent of sales in July 2013.

The combined share of all distressed property sales declined further in July, dropping from 9.7 percent in June to 9.4 percent in July. Distressed sales continued to be down more than 50 percent from a year ago, when the share was 17.2 percent.

Twenty-one of the 41 reporting counties showed a month-to-month decrease in the share of distressed sales, with 20 of the counties recording in the single-digits, including Alameda, Contra Costa, Marin, Orange, Plumas, San Diego, San Luis Obispo, San Mateo, Sonoma, and Santa Clara counties -- all of which registered a share of five percent or less.

Of the distressed properties, the share of short sales fell to its lowest level since February 2008, falling to 4.9 percent in July, down from 5 percent in June. July's figure was less than half the 11.6 percent recorded in July 2013.

The share of REO sales fell in July to 4.1 percent, down from 4.4 percent in June and from 5.2 percent in July 2013.

The supply of equity and REO properties eased in July, with the Unsold Inventory Index of equity sales edging up from 3.8 months in June to 3.9 months in July, and from 2.4 months in June to 2.5 months in July for REO sales. The supply of short sales dipped from 4.8 months in June to 4.7 months in July.