“Perfect Storm” Kept California Buyers Home in December

News

Pending home sales in California
plummeted in December, falling 25.2 percent because of what the California
Association of Realtors® (C.A.R.) called “a perfect storm” of
circumstances.  The Realtor group said a
shortage of homes for sale, rising interest rates and higher home prices
sidelined many prospective buyers and drove pending sales down for the second
straight month.

 

 

The Pending Home Sales Index (PHSI)
dropped to 68.8 in December from a revised 92 in November.  The index, based on signed contracts to
purchase, was down 16.8 percent from the December 2012 level of 82.8.

The share of equity or non-distressed
property sales shrank slightly from November’s number but still remained strong,
dipping from a recent high of 86.4 percent to 84.3 percent, the sixth month
that at least four of five sales were non-distressed.  In December 2012 the equity share was 63.4
percent.   

 

 

C.A.R. said that distressed property
sales rose in December (from 13.6 percent to 15.7 percent) because lenders tend
to push sales through to clear their books at year’s end.  Short sales made up 10.1 percent of sales and
REO sales accounted for 5.0 percent.  In
November the shares were 8.8 percent and 4.4 percent respectively while a year
earlier short sales represented 24.8 percent of all sales and REO 11.4 percent.

Inventories in the state remain “extremely
constrained” C.A.R. says.  Its Unsold
Inventory Index for equity sales fell from 3.6 months in November to 3 months
in December.  Also down were measures of
distressed property availability with the supply of REOs estimated at 2.8
months and short sales at 3.2 months compared to 3.6 months and 4.2 months in
November.

 

 

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