Housing Market in California Slowing Down for Fall

Posted by Michael Bates on August 23, 2017 No Comments

California pending home sales trended lower in July versus June and year over year, according to recent data assembled by the California Association of Realtors.

The strong sales momentum that occurred during the peak home-buying season gave way in July as shrinking housing inventory and waning affordability stifled pending home sales. The housing market is showing signs of slowing as real estate agents reported fewer floor calls, listing appointments, and less open house traffic than in June, the associations July Market Pulse Survey found.

Based on signed contracts, year-over-year statewide pending home sales fell in July on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI) declining 2.6% from 122.5 in July 2016 to 119.4 in July 2017. California pending home sales also edged down on a monthly basis for the first time since March, decreasing 0.9% from the June index of 120.4.

Pending home sales have declined on an annual basis for six of the last seven months so far this year. However, the pace of decline has slowed in recent months. After a solid run-up of pending sales growth in April, May and June, continued housing inventory issues and affordability constraints may have pushed the market to a tipping point, suggesting the pace of growth will begin to slow in the fall.

The Southern California region was the only major region to record an increase in pending sales from the previous year – the third straight annual gain. Los Angeles, San Bernardino County and Orange County saw healthy spikes of 4%, 6% and 4.6%, respectively.

Pending sales in San Diego (-5.8%) and Riverside (-4.2%) counties declined from last July. The San Francisco Bay Area experienced the largest drop in pending sales in July, falling 11.5% on an annual basis. San Francisco and San Mateo counties, two of the state’s most expensive markets, were both down double digits – 11% and 21.4%, respectively. Santa Clara County, where home prices also are at all-time highs, saw pending sales decline 9.8% from a year ago.

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