- Pending sales in California hanging tough, even though slow season has begun.
- Even though sellers are averaging more than 3 offers per home, the gap in price expectation and reality narrowed.
- Statewide, 27 percent of homes closed above, and 47 percent closed below the asking price in October.
The closest thing that the real estate industry has to mind-reading is pending home sales.
Across the state, pending home sales bounced back from the previous month in October. As a bonus, pending sales were also significantly higher on an annual basis, showing buyer’s hands in plans to close their deals in the next couple of months.
Pending sales were higher year-over-year throughout The Golden State, with Southern California and Central Valley both increasing at a double-digit rate year-over-year.
California Realtors also got a little more good news in the California Association of Realtors’ (CAR) October Market Pulse Survey. The survey showed an increase in sales with multiple offers compared with September’s figure, and an increase in the number of offers received.
According to the Pulse Survey, 64 percent of properties received multiple offers in October, indicating the market remains competitive. That’s a big increase over October 2014, when 51 percent of properties received multiple offers. The average number of offers per property keeps climbing as well. Sellers received 3.2 offers per listing in October, up from 2.4 in September and up from 2.3 during the same month last year.
On the price side, 27 percent of homes closed above the asking price in October, and just about half, (47 percent) closed below asking price. That leaves exactly one-quarter of the homes closed at their asking price.
The big gap between the expectation and the reality in asking prices closed a little bit last month. For the slightly more than one in four homes that sold above asking price, the premium paid over asking price fell to an average of 8.9 percent, down from 11 percent in September. The homes that sold below asking price sold for an average of 12 percent below asking price in October, up from 10 percent in September.
And, the survey found that sellers are keenly aware that price appreciation is leveling off: About one-third of properties had price reductions in October, the highest level for that metric in the last 12 months.
The prognostications for pending sales remain good, even as the market enters the cooling off period of the winter months. Based on the Pending Home Sales Index October’s rate rose 2.5 percent from a revised 110.7 in September to 113.4 in October, based on signed contracts. The month-to-month gain was better than the average increase of 0.9 percent from September to October observed in the last seven years.
On an annual basis, statewide pending home sales were up 13.9 percent from the revised 99.5 index recorded in October 2014.
Pending sales have been increasing on a year-over-year basis since November 2014 and have seen double-digit increases for nine consecutive months.
While non-distressed property sales still make up the lion’s share of transactions, distressed sales crept up a bit in October, to 6.3 percent of total sales. Non-distressed sales are, though, at the highest levels since the fall of 2007.