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Despite the drop in sales, California looks promising

The California Association of Realtors (C.A.R.) reported Tuesday that, although pending home sales in the state fell from March to April, other statistics indicate a good start for the housing market.

C.A.R.‘s Pending Home Sales Index (PHSI) fell from a revised 138.9 in March to 128.0 in April. This index was nearly 14 points higher than the revised 114.4 index from April 2011, marking the 12th consecutive month that pending sales were higher year-over-year. Pending home sales figures are often used as an indicator of the market’s future direction.

C.A.R. speculated that the drop in pending home sales from March to April may be attributed to inventory.

“Inventory constraints could be a contributing factor to lower pending sales,” said LeFrancis Arnold, president of C.A.R. “The tight inventory we’ve been experiencing in the distressed market over the past several months is now spreading to equity properties, essentially affecting the supply conditions of both the distressed and non-distressed markets.”

The share of equity sales (non-distressed property sales) compared with total sales increased to 58 percent in April, its highest level since July 2008. This figure is up from March’s 54.5 percent and last year’s 52.3 percent.

Shares of distressed sales (composed of foreclosures and short sales) in California decreased in April to 42 percent, down from 45.5 percent in March and 47.7 percent the previous year. The share of short sales also declined from the previous month: 19.4 percent of distressed sales were short sales, a drop from 21 percent in March and slightly higher than 19.1 percent in April 2011.

The share of REO sales dropped as well, moving 22.3 percent, down from 24.1 percent in March and 28.3 percent the previous year. April’s figure for REO sales was the lowest it’s been in four years.

In other data, April’s sales came in at an annualized pace of 555,300, making it the sixth consecutive month in with an annual pace above 500,000. The statewide median home price was $308,050, up 5.7 percent from March and 1.6 percent from April 2011. It’s also the first time the median went above $300,000 since December 2010.

With prices in distressed markets staying stable, C.A.R. chief economist Leslie Appleton-Young said that, inventory scarcities aside, the market got off to a strong start in spring.

“One thing is clear, we’ve got the best start for the housing sector that we’ve seen in 5 years,” she said.

 

Source: DS News By: Tory Barringer

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