Tight Inventory Slows California Pending Home Sales in September, Equity Sales Reach 4-Year Peak

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According to the California Association of Realtors (C.A.R.), a continued lack of housing inventory constrained California pending home sales in September, while the share of equity sales reached its highest level in four years.
 
C.A.R.'s Pending Home Sales Index (PHSI) fell 3 percent from a revised 119 in August to 115.4 in September, based on signed contracts.  Pending sales were up 0.8 percent from the 114.5 index recorded in September 2011.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
 
"It's typical to see a drop in pending sales from August to September as the housing market transitions from the peak season to the slow season, so the month-to-month decline in the index is not unusual," said C.A.R. President LeFrancis Arnold.  "While it's encouraging to see an improvement in equity and short sales from last year, a supply shortage continues to put a cap on sales, as housing inventory remains significantly below the 6- to 7-month supply we see in a balanced market.  The REO market, in particular, was most affected by the lack of housing supply as both sales and inventory dropped nearly 60 percent from a year ago."
 
California distressed housing market data:

• The share of equity sales - or non-distressed property sales - compared with total sales grew to its highest level in four years.  The share of equity sales in September increased to 63 percent, up from 62.2 percent in August.  Equity sales made up about half (50.8 percent) of all sales in September 2011.

• The share of REO sales statewide shrank further in September, while the share of short sales grew.  The combined share of all distressed property sales slipped to 37 percent in September, down from 37.8 percent in August and down from 49.2 percent in September 2011.

• Of the distressed properties, the share of short sales grew to 24.3 percent in September from 23 percent in August and from 21.5 percent a year ago.

• In September, the share of REO sales contracted to less than half what it was a year ago to 12.3 percent, down from 14.4 percent in August and 27.5 percent in September 2011.

• The available supply of REOs eased up in September but remains tight.  The Unsold Inventory Index for REOs stood at 2.2 months in September.  The Unsold Inventory Index for short sales was 3.9 months and was 3.8 months for equity sales.