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.