California appears to be gearing up for a strong spring market according to pending home sales figures released today by the California Association of Realtors® (C.A.R.). The group reports that, based on contracts for home purchases, pending sales jumped 17.8 percent in March and were at the highest level in eight months. C.A.R's Pending Home Sales Index (PHSI) rose from 97.1 in February to 114.4 in March. Despite the sharp monthly increase, the PHSI was still well below the revised index of 126.9 for March 2013.
The PHSI is a forward-looking indicator that provides information on the future direction of home sales. Pending sales are generally expected to close within 60 to 90 days.
The share of equity sales continued to rise steadily in March as it has for the last year. Equity or non-distressed sales represented 87.6 percent of home sales during the month compared to 85 percent in February and it marked the ninth straight month that equity sales made up more than 80 percent of the market. In March 2013 equity sales had a 71.8 percent market share.
Both short sales and sales of lender-owned real estate (REO) were down in March, falling to a combined total of 12.4 percent from 15 percent the previous month. One year earlier distressed sales made up 28.2 percent of the market.
Short sales in March were at levels last seen in 2008, accounting for 6.6 percent of sales compared to 8.2 percent in February and 17.2 percent in March 2013. REO sales had a 5.4 percent share, down from 6.3 percent in February and about half what they were a year earlier. The decrease in distressed sales was observed statewide; 30 of 38 counties reporting to C.A.R reported a month-over-month decline in the category.
The inventory of available properties, especially non-distressed properties, declined, tightening housing supply conditions. C.A.R.'s Unsold Inventory Index for equity sales dropped from 4.8 months in February to 4 months in March; the supply of REO went from 3 months to 2.8 months and short sales from 5 months to 4.7 months.
