California pending home sales were higher on a month-to-month and year-to-year basis, signaling a moderate increase in future sales, according to the California Association of Realtors.
Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.
Based on signed contracts, statewide pending home sales increased in December on a seasonally adjusted basis, with the Pending Home Sales Index rising 1.9 percent from 115.8 from December 2015 to 118.1 in December 2016 - even with new mortgage rules that pushed sales higher in December a year ago. On a monthly basis, California pending home sales were up 3.3 percent from the November index of 114.4.
Southern California saw the largest increase in pending sales last month, rising 7.8 percent on an annual basis and decreasing 16.1 percent on a monthly basis. Overall pending sales in the Central Valley improved 0.9 percent from December 2015 and were down 18.4 percent from November.
Due to tight housing supplies and low affordability, the San Francisco Bay Area as a whole saw a drop of 14.2 percent in pending sales compared to December 2015 and a 32.5 percent drop from November. San Mateo County led the region's annual decline at 35.3 percent, followed by San Francisco County at 23.3 percent, and Santa Clara County at 18.6 percent.
"The Bay Area housing market will likely see a similar trend in the months ahead due to the severe shortage of affordable homes for sale," said Denise Welsh, president of the Silicon Valley Association of Realtors. "Overall, the housing market continues to be competitive with some homes still receiving multiple offers, but we need an increase in supply to keep home prices at a moderate level, given the rising mortgage rates."
According to the December California Association of Realtors Market Pulse Survey, the share of properties selling above asking price increased to 23 percent from 18 percent in December 2015. On the other hand, the share of homes selling below asking price fell from 57 percent a year ago to 43 percent in December. The premium paid over asking price rose to 11 percent, up from 8.4 percent in November and 9.2 percent a year ago.
Nearly two-thirds of properties for sale (64 percent) received multiple offers in December, down from 66 percent in November and 65 percent in December 2015. The share of properties receiving three or more offers in December increased to 40 percent. Thirty-six percent of properties received three or more offers in November, and 40 percent of properties received three or more offers a year ago.
Nationwide pending home sales picked up in December, as well, with solid increases in the South and West offsetting weakening activity in the Northeast and Midwest, according to the National Association of Realtors. The pending home sales index increased 1.6 percent to 109.0 in December from 107.3 in November. The index is 0.3 percent above December 2015.
Lawrence Yun, National Association of Realtors chief economist, said contract activity was mixed throughout the country in December but ultimately ended on a high note to close out 2016. "Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract," said Yun.
Yun worried about low inventory levels. "The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most," said Yun.
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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