Housing inventory shortages and affordability concerns dampened California’s strong start to the new year, according to the latest pending homes sale report from the California Association of Realtors.
But regardless of the dip, survey results shows that California Realtors are still positive about the upcoming spring home-buying season and expect improved market conditions in the near term.
The CAR report found that based on signed contracts, statewide pending home sales decreased in February on a seasonally adjusted basis, with the Pending Home Sales Index slightly dropping 2.6% from 113.5 in February 2016 to 110.6 in February 2017. This marks the weakest February in three years.
However, on a monthly basis, California pending home sales were up 3.2% from the January index of 107.2.
Broken up regionally, non-seasonally adjusted pending home sales in the Southern California region decreased for the first time in nearly a year, falling 2.8% from 97.9 in February 2016 to 95.2 in February 2017. The Southern California region had been leading the state in sales for the past year.
In the San Francisco Bay Area, inventory shortages continue to plague market affordability. The Bay Area pending sales index decreased 10% from 145.2 in February 2016 to 130.6 in February 2017.
Meanwhile, pending sales in the Central Valley Region dropped 11.4% from 86.2 in February 2016 to 76.3 in February 2017.
The dip in home sales echoes CAR’s most recent existing-home sales report that stated California home sales and median home price backpedaled on a monthly basis in February.
According to CAR’s Market Pulse Survey, which is a monthly online survey sent to more than 10,000 California Realtors, conditions are likely to improve moving into spring.
Realtors reported elevated market activity, with an increase in floor calls, presentations, and open house traffic for the second month in a row.
The survey results stated that Realtors’ expectation of market conditions over the next year slightly ticked higher in February, rising to an index of 68, up from an index of 64 a year ago.
However, affordability and housing inventory concerns still trouble California Realtors. Once again, a lack of available inventory was the top concern for 40% of Realtors, which is the highest level in a year.
After inventory, eroding housing affordability/high interest rates concerned 32% of Realtors, while inflated home prices/housing bubble concerned 14% of Realtors.
Lastly, Realtors also cited a slowdown in economic growth, lending and financing, and policy and regulations as big concerns.