The California housing market appears to be continuing its upward trend as pending home sales rose in May, marking their sixth straight annual gain. Nationwide pending home sales appear to be on a momentum, as well, registering their highest level in over nine years.
California pending home sales were up 12.1 percent on an annual basis from the revised 110.3 index recorded in May 2014, marking the sixth straight month of year-to-year gains and the fourth straight month of double-digit advances. Statewide pending home sales fell in May on a month-to-month basis, with the Pending Home Sales Index down 4.6 percent from 129.6 in April to 123.6, based on signed contracts.
A shortage of available homes in the San Francisco Bay Area stifled pending sales in May, pushing the PHSI to 135.1, down 1.1 percent from 136.6 in April and down 2.4 percent from the 138.5 index recorded in May 2014. Pending home sales in Southern California rose 1.6 percent in May to reach an index of 105.4, up 12.5 percent from the May 2014 index of 93.7. Pending home sales in the Central Valley fell after three straight months of increases, dropping 16.1 percent from April to reach an index of 108.4 in May but up 18 percent from the 91.9 index of May 2014.
"Our inventory still needs improvement, but overall, the market remains active as we enter the summer buying season," said Silicon Valley Association of REALTORS® president Chris Isaacson.
Meanwhile, the National Association of REALTORS® reports nationwide pending home sales continued to rise in May and are now at their highest level in over nine years. The national Realtor group's Pending Home Sales Index climbed 0.9 percent to 112.6 in May from a slight downward revision of 111.6 in April and is now 10.4 percent above May 2014 (101.9). The index is at its highest level since April 2006, when the index was at 113.7.
Lawrence Yun, NAR chief economist, says the rise in contract activity increases the likelihood that home sales are off to their best year since the downturn. "The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring," said Yun. "It's very encouraging to now see a broad based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive."
Yun warned that this year's stronger sales amid similar housing supply levels from a year ago have caused home prices to rise to an unhealthy and unsustainable pace.
"Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages," said Yun. "Without meaningful gains in new and existing supply, there's no question the goal post will move further away for many renters wanting to become homeowners."
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.
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