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Pending home sales ease, signal housing market is stabilizing

Wednesday, January 17, 2007

Prospects for 2007 appear bright as the California real estate market continues to stabilize. The same trend is being reflected in the housing market nationwide and is likely to continue, based on the latest reading on pending home sales published by the National Association of Realtors.

The Pending Home Sales Index, based on contracts signed in November, eased by 0.5 percent to 107.0, from 107.5 in October. The November level was 11.4 percent lower than that of the previous year. The decline from year-ago levels has been steadily narrowing since July, which was 16 percent lower than the same month in 2005.

David Lereah, chief economist for the national Realtor group, said the narrowing from year-ago levels is a sign that the housing market is stabilizing.

"The index is pointing toward fairly stable home sales in the near future," Lereah said.  "That is another indicator that home sales likely bottomed-out in September."

Home sales edged upward after September.

The index is derived from pending sales of existing homes – single family units, condominiums/townhomes and co-ops. A sale is listed as pending when the contract has been signed and the transaction has not closed. Pending sales typically are finalized within one or two months of signing.

Regionally, the PHSI in the Midwest rose 4.8 percent in November to 101.7 but was 11.6 percent below a year ago. The index in the South slipped 1.1 percent to 121.6 and was 8.9 percent below November 2005. The index in the West declined 2.6 percent to 106.6 and was 15.9 percent lower than a year earlier. In the Northeast, the index was down 2.8 percent in November to 85.5 and was 9.6 percent below November 2005.

"When we look at the forecast for existing-home sales in 2007 on a quarterly basis, we see gradual improvement over the course of the year," Lereah said. "That will support future price appreciation as inventories are drawn down."

California Association of Realtors officials reported the median price of an existing home increased 1.4 percent in November 2006 and analyzed that a reported 22.2 percent decline in home sales statewide in November is part of the stabilizing process. Closed escrow sales of existing, single-family detached homes in California totaled 450,930 in November compared with the 579,560 sales pace recorded in November 2005.

"After fairly steep declines in sales during the first half of the year, the market appears to have stabilized at about 450,000 sales on a seasonally adjusted annualized basis," said the California Realtor group's 2007 president, Colleen Badagliacco.

The median price of an existing, single-family detached home in California during November 2006 was $555,290. The November 2006 median price increased 0.7 percent compared with October's revised $551,620 median price.

Unsold Inventory Index for existing, single-family detached homes in November 2006 was 7.4 months, compared with 3.6 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 70 days in November 2006, compared with 39 days (revised) for the same period a year ago.


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.

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