No one envies the plight of the homebuyers in California, who struggle against low inventory, high demand, and rising prices. Due to a recent rise in inventory, however, it could be getting slightly better.
California pending home sales increased in June, the third straight month of annual increases, according to the California Association of Realtors.
The Pending Home Sales Index increased 3.2% from 123.4 in June 2015 to 127.3, based on signed contracts. This will, in turn, cause higher closed transactions in July and August.
The San Francisco Bay area even came out ahead of its fellow Southern California and Central Valley regions, which it had been trailing since the beginning of the year.
In the Bay Area, pending sales increased 5.1% from last year.
The continuation of this upward trend is no surprise. What is shocking, however, is that the reports showed an improvement in housing supply during recent months, especially in Alameda, San Francisco, San Mateo and Santa Clara counties.
This increase in supply is also decreasing the housing demand, and bringing relief to California’s homebuyers as it takes an edge off the competition.
In fact, a look into Black Knight Financial Services’ latest Home Price Index report shows that the California housing market could be cooling off.
Indeed, this morning's Case Shiller report also shows the previously strong spots of San Diego, San Francisco and Los Angeles saw only modest home price increases.
Floor calls, listing appointments and open house traffic declined in June, according to CAR’s June Market Pulse Survey.
In fact, the number of homes selling above asking price declined in June, according to the survey. After reaching an all-time high in May of 38%, the share of homes selling above asking price decreased to 35% in June.
The number of homes selling below asking price also increased to 37%, up from 34% last month. The remaining 28% sold at asking price.
On the other hand, for the homes that did receive offers over the asking price, the premium increased for the first time in three months to 11%, up from 9.4% in May, but unchanged from last year.
Homes that sold for below asking price sold for an average of 11% less than asking price in June, up from 10% in May, but also unchanged from last year.
While the market remains competitive, with 72% of homes for sale receiving multiple offers, the number of offers per property dipped slightly to 3, down from 3.1 in May but up from 2.9 last year.
About 22% of properties saw price reductions in June, down from 23% in May, but up from 21% last year.
Home prices continue to worry Realtors as the top concerns for 68% of them included low inventory, declining housing affordability and high home prices.