Pending home sales in California continued to improve from a year ago with solid gains. Compared to November, December pending home sales experienced a drop due to seasonal factors, according to REALTOR® officials.
Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property.
The California Association of REALTORS® (C.A.R.) reports statewide pending home sales remained strong in December on an annual basis, with the pending home sales index increasing 8.3 percent from 71.9 in December 2014 to 77.9 in December 2015. On a monthly basis, California pending home sales fell from November, down 22.4 percent from an index of 100.4 to 77.9 in December.
"November and December are usually slower months because of the holidays, but even then, year-over-year statewide and in regions like the Bay Area, the market stayed strong," observed Karen Trolan, president of the Silicon Valley Association of REALTORS®.
Year-over-year pending sales in the San Francisco Bay Area increased at a double-digit rate, according to the C.A.R. report. Though December pending sales fell 36.4 percent from November in the Bay Area, they were up 12.4 percent from December 2014's index.
In a separate report, California REALTORS® responding to the C.A.R. December Market Pulse Survey saw a small decrease in the number of sales with multiple offers compared with November, as well as a decrease in the number of offers received, another reflection of seasonal factors. REALTORS® reported nearly one in five homes (18 percent) closed above asking price in December; 57 percent closed below asking price; and 25 percent closed at asking price.
For the homes that sold above asking price, the premium paid over asking price edged up to an average of 9.2 percent, up from November's 8.9 percent, but down from 11 percent in December 2014. The 57 percent of homes that sold below asking price sold for an average of 13 percent below asking price, unchanged from November and a year ago.
The market remains competitive, as 65 percent of properties received multiple offers in December, compared with 61 percent of properties in December 2014. The average number of offers per property was 2.5 in December, down from 2.7 in November and 2.6 in December 2014.
When asked about their biggest concerns, one in four (25 percent) REALTORS® answered tight housing supply; 20 percent indicated declining housing affordability; and 14 percent stated overinflated home prices. Realtors were optimistic about next year's housing market, with the vast majority (89 percent) expecting similar or better market conditions in 2016.
"In the Silicon Valley region, we are poised for another good year. The economy is in good shape with solid job growth. Inventory is slowly increasing compared to last year, placing the market in a position for a modest increase in home sales in 2016," added Trolan.
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 email or call the SILVAR office at (408) 200-0100.