California pending home sales bounced back from the previous month in October, but nationwide, pending sales were flat, according to the latest official REALTOR® reports.
According to the California Association of REALTORS®, pending sales statewide increased in October. The Pending Home Sales Index rose 2.5 percent from 110.7 in September to 113.4 in October, based on signed contracts. The month-to-month gain was better than the average increase of 0.9 percent from September to October observed in the last seven years. The index was also significantly higher on an annual basis, up 13.9 percent from the October 2014 index, signaling higher closed escrows in the next couple of months.
Meanwhile, the National Association of REALTORS®reportspending home sales nationwide were mostly unchanged in October. Gains in the Northeast and West were offset by declines in the Midwest and South.
Lawrence Yun, NAR's chief economist, said buyers are struggling to overcome a limited number of homes for sale and prices that are rising too fast in some markets. "Contract signings in October made the most strides in the Northeast, which hasn't seen much of the drastic price appreciation and supply constraints that are occurring in other parts of the country," he said. "In the most competitive metro areas – particularly those in the South and West – affordability concerns remain heightened as low inventory continues to drive up prices."
Yun presented his 2016 economic outlook and housing forecast last month at the 2015 REALTORS® Conference & Expo in San Diego. He forecasts existing home sales will finish this year at 5.30 million, the highest since 2006. Yun predicts further expansion in existing sales next year, but worries ongoing inventory shortages and affordability pressures from rising prices and mortgage rates will temper sales growth in 2016.
"Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home," said Yun.
Silicon Valley Association of REALTORS® president Chris Isaacson, who attended Yun's presentation in San Diego, said the San Francisco Bay Area is one of the markets greatly impacted by rising prices and rents. "We are experiencing these difficulties now with so many buyers, especially first-time buyers, trying to purchase a home they can afford, so they can be able to live and work in the Bay Area," said Isaacson.
According to C.A.R.'s monthly REALTOR®Market Pulse Survey, more than one in four homes closed above asking price in October and one-fourth closed at asking price. REALTORS® report about two-thirds of properties received multiple offers in October, indicating the market remains competitive.
When asked what their biggest concerns are, 22 percent of REALTORS® said low housing affordability; 21 percent indicated a lack of housing inventory; 16 percent cited overinflated home prices; and 12 percent said a slowdown in economic growth.
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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