California Pending Home Sales Down From Last Year; Equity Sales Reach Highest Levels in Since 2008

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According to the California Association of Realtors (C.A.R.), California's pending home sales rose in August from July, but a continuing shortage of housing inventory sent pending sales lower from the previous year.  Additionally, the lack of supply, particularly of REO properties, sent the share of equity sales to its highest level in four years.
 
C.A.R.'s Pending Home Sales Index (PHSI) rose 2.7 percent from a revised 115.8 in July to 118.9 in August, based on signed contracts.  Pending sales were down 2 percent from the 121.4 index recorded in August 2011. 

August's year-to-year decline reversed a 15-month trend of higher pending sales than the previous year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

"While August's pending sales were higher than July, the pending sales decline from last year is not a surprise, as we started to see a gradual slowdown in the year-to-year change over the past five months, primarily due to a dearth of available homes," said C.A.R. President LeFrancis Arnold.

California distressed housing market data for August 2012:
 

• The share of equity sales - or non-distressed property sales - compared with total sales grew to its largest level in four years.  The share of equity sales in August increased to 62.2 percent, up from 59.5 percent in July.  Equity sales made up 51.7 percent of all sales in August 2011.

• The share of REO sales statewide contracted further in August, while the share of short sales crept up slightly.  The combined share of all distressed property sales fell to 37.8 percent in August, down from 40.5 percent in July and down from 48.3 percent in August 2011.

• Of the distressed properties, the share of short sales edged up to 23 percent in August from 22.6 percent in July and from 20.2 percent a year ago.

• In August, the share of REO sales shrank to nearly half what it was a year ago to 14.4 percent, down from 17.4 percent in July and 27.8 percent in August 2011.

• The available supply of REOs for sale remained tight in August, with the Unsold Inventory Index standing at a 1.6-month supply in August 2012.  The August Unsold Inventory Index for short sales was 3.7 months and stood at 3.3 months for equity sales.