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Pending home sales continue downward trend.

posted Aug 11, 2017, 3:48 PM by Joyce Evans   [ updated Aug 11, 2017, 3:49 PM ]
Despite robust closed escrow sales in June, the California Association of REALTORS® (C.A.R.) is reporting an impending slowdown in the state’s housing market due to shrinking housing inventory and suppressed housing affordability.
C.A.R. said the state’s pending home sales is continuing a downward trend. Based on signed contracts, year-over-year statewide pending home sales fell for the sixth straight month in June on a seasonally adjusted basis.
From C.A.R.’s 2nd quarter housing affordability report, released Aug. 9, only 29 percent of California households could afford to purchase the $553,260 median-priced home, down from 32 percent in first-quarter 2017 and down from 31 percent in second-quarter 2016.
In addition, a minimum annual income of $110,890 was needed to make monthly payments of $2,770, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.09 percent interest rate.
In San Diego County, C.A.R. said it would require a minimum qualifying annual income of $121,260 to afford a home at the median price of $605,000. The monthly payment for the median-priced home, including taxes and insurance, would be $3,030.  
Also, C.A.R. said 38 percent of homebuyers statewide are able to purchase a $443,400 median-priced condo or townhome. An annual income of $88,870 would be required to make a monthly payment of $2,220.
Meanwhile, according to C.A.R.’s latest Market Pulse Survey, REALTORS® reported fewer floor calls and listing appointments in June but higher open house traffic than in May. Other findings from C.A.R. included:
-- More properties are selling over asking price from a year ago, said C.A.R. In an online survey to more than 10,000 California REALTORS® to measure data about their last closed transaction, 39 percent of respondents said in June 2017 their last closed transaction sold over the asking price, compared to 35 percent in June 2016. In a year-over-year comparison of June 2017 and June 2016, 25 percent said their last closed transaction sold “at” the asking price and 36 percent “below” the asking price, compared to 28 percent (“at) and 37 percent (“below) for June 2016.
-- For homes that sold above asking price, the premium paid over asking price fell from 11 percent in June 2016 to 7 percent in 2017, the lowest since February 2014.
-- When C.A.R. asked REALTORS® about the number of offers received for their last closed transaction, 74 percent said they received multiple offers in July 2017, compared to 72 percent in July 2016.
-- When C.A.R. asked REALTORS® about their top concerns, 38 percent responded with “a lack of available inventory.” Declining housing affordability-high interest rates concerned 29 percent of REALTORS®, while inflated home prices/housing bubble was cited by 23 percent of REALTORS®. A slowdown in economic growth, lending and financing, and policy and regulations rounded out REALTORS®’ remaining biggest concerns.
“A lack of available homes for sale continues to be the largest single factor influencing California’s housing market,” said C.A.R. President Geoff McIntosh. “With active listings 13.5 percent lower than last June, we’ve now experienced a full two years in which active listings have fallen on a year-over-year basis and the lowest inventory level this year. Would-be sellers aren’t listing their homes as many of them would also face an inventory challenge if they were to turn around and buy another property.” 
“While June home sales improved at a healthy pace, the growth in sales was primarily in the mid- to higher-end price ranges. In fact, sales in the lower price ranges were down significantly as a tight supply of affordable homes continues to plague the market and impede the sales of starter homes,” C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “This factor has disproportionately pushed prices higher at the lower end of the market, leading to eroding affordability that either prevents or delays first-time buyers from getting on the housing ladder.”