Markets & Economy

August signaled end of California homebuying season

Month-to-month decrease in activity higher than average
  • While a drop in activity is expected, the month-to-month decline was larger than is historically normal.
  • Both San Francisco and Southern California saw month-to-month declines of roughly 14 percent.
  • Housing affordability and Realtors' concerns regarding inventory may indicate that more month-to-month declines are in store for California.

Pending home sales activity dipped in California during August, as did the number of listed homes that received multiple offers.

Both these findings indicate the state’s prime homebuying and homeselling season has passed.

According to the California Association of Realtors (CAR), pending home sales activity fell by 8.7 percent on a month-to-month basis.

The decrease was higher than the average July-August gain of 0.3 percent observed in the last seven years, a CAR release stated.

The performances of the San Francisco Bay Area and Southern California regions are the primary reason for the overall drop in sales volume.

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Spanning July to August, pending sales fell by 14.1 percent in the Bay Area and by 13.7 percent in Southern California. Activity in the Central Valley also decreased, falling 5.7 percent.

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A survey of roughly 300 Realtors showed that 58 percent of homes sold statewide in August received multiple offers, down from 67 percent in July and 61 percent in August 2014. Additionally, the average number of offers per property dipped in August to 2.4, down from 3.0 in July and 2.5 in August 2014.

Nearly half — 48 percent — of homes sold in August closed below asking price, with the average price 11 percent lower than asking.

On the flip side, 25 percent of homes sold above asking price, with the average premium paid dropping to 8.2 percent. In July, the average premium was 11 percent.

CAR notes that roughly 22 percent of Realtors cited low housing affordability as their biggest concern moving forward, with another 18 percent pointing to overinflated home prices. Inventory levels are of most concern to another 18 percent of Realtors.

While home sales activity dipped on a month-to-month basis, it also rose 12.8 percent on an annual basis. This marks the tenth straight month of year-to-year sales gains and the seventh straight month that’s seen double-digit gains.

 Pending sales activity in the Bay Area was up 1.1 percent, while Southern California activity rose by 14.7 percent. The Central Valley saw the largest year-to-year rise, 15.9 percent.

Email Erik Pisor