According to a California Association of REALTORS® (C.A.R.) report released on Monday, California pending home sales dipped in August. Meanwhile, the share of equity sales has risen on a month-to-month basis for 18 of the last 19 months and now makes up more than four in five sales, the highest share since November 2007.
Buyers, faced with higher mortgage interest rates, stepped back from the market in August, according to C.A.R. "Rising interest rates over the past several months at the specter of a tapering of the Fed's stimulus program sent buyers to the sidelines in August," said C.A.R. vice president and chief economist Leslie Appleton-Young. "However, the Fed's decision last week to postpone the pullback should lead to lower interest rates, which bodes well for prospective buyers."
C.A.R.'s pending home sales index fell 5 percent in August to 108.3, down from 114 in July, based on signed contracts. Pending sales were down 8.9 percent from the 118.9 index recorded in August 2012. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
Higher mortgage rates don't appear to have dampened interest in parts of Silicon Valley. Information from MLSListings Inc. indicates there were 1,460 single-family home sales under contract in August in Santa Clara County, up from 1,439 the previous month. Pending home sales in Palo Alto dipped from 38 in July to 31 in August 2013, but pendings in San Jose were up from 836 home sales under contract in July to 879 in August. Los Gatos had 39 home sales pending in August, compared with 31 in the previous month.
In San Mateo County, pending home sales dropped to 539 in August, from 567 in the previous month. San Mateo pendings increased from 65 in July to 67 in August, while pending home sales in Menlo Park fell from 23 in July to 18 in August.
Carolyn Miller, president of the Silicon Valley Association of Realtors, does not see cause for concern. "The market has settled down from being fast and furious a few months ago. Buyers appear more selective and don't feel as much pressure to jump into the market. It could be because interest rates, though still good, are higher than they were, or because there are a few more homes to choose from, but I don't see demand waning by much anytime soon," said Miller.
According to C.A.R.'s distressed sales report, 25 of the 38 reported counties showed a month-to-month decrease in the share of distressed sales, with Alameda, Contra Costa, Marin, Orange, San Diego, San Mateo, and Santa Clara all recording shares in the single digits.
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.