The California Association of REALTORS® on Monday released some good news even as real estate watchers continue presenting a dim outlook of the state's housing market. The C.A.R. report indicated pending home sales in the state rose in May, posting the first year-over-year increase in 18 months.
C.A.R. reports California's Pending Home Sales Index was 118.3 in May, an increase of 1.6 percent from April's revised index of 116.4, based on contracts signed in May. The index also was up 12 percent from May 2010. Pending home sales are forward-looking indicators of future home sales activity.
"May marked the first year-over-year increase in pending sales since November 2009 and the largest annual increase since August 2009," said California Association of REALTORS® President Beth L. Peerce. "May's increase in pending sales is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010, and as a result, annual sales for all of 2011 should match or exceed last year's annual pace."
The report on pending sales follows disappointing May sales and price reports for C.A.R. and the National Association of REALTORS® (NAR). According to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide, closed escrow sales of existing, single-family detached homes in California totaled 471,840 units in May, down 5.8 percent from April and down 14.4 percent from the previous year. The statewide median price of an existing, single-family detached home sold in California fell slightly by 0.7 percent in May to $291,760 from a revised $293,800 in April. The May median price was down 10.9 percent from the $327,460 recorded in May 2010.
NAR's May report indicated sales of existing homes fell 3.8 percent in May to a seasonally adjusted annual rate of 4.81 million, down from a revised rate of 5 million in April. Sales were more than 15 percent lower than in May 2010. The national median existing-home price for all housing types was $166,500 in May, down 4.6 percent from May 2010. The weak economy, including the spike in gas prices, widespread and severe weather conditions, and tighter financing have all contributed to the slowdown in home sales and median price, according to the REALTOR® association reports.
"Buyer hesitancy continues to be a factor impeding a full recovery, especially since there hasn't been any real big improvement in financing conditions," said Gene Lentz, president of the Silicon Valley Association of REALTORS®. "With homebuyer tax credits no longer offered and tighter financing conditions, we can't expect a full and immediate recovery in California home sales and median price."
Lentz worries that the expiration of the conforming loan limits for high cost areas on September 30 may further slow sales. Current limits range from $271,050 to $729,750, based on 125 percent of the local area median home price. These limits will revert to formulas based on 115 percent of the area's median home price. Some public policy makers have proposed allowing those limits to fall even further.
"Reducing the current loan limits could further stymie a recovery, especially in California," said Lentz. He said Realtors are urging Congress to make the current loan limits permanent.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.