Housing Shortage? What Does It Mean?

One of the few new construction projects in South lake TahoeContinued housing shortage sends California pending home sales lower in July

LOS ANGELES (Aug. 23) – A continued shortage of available homes on the market impeded California pending home sales in July, but pending sales were still higher from the previous year for the 15th straight month, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Pending home sales data:

C.A.R.’s Pending Home Sales Index (PHSI)* fell 4.2 percent from a revised 121.2 in June to 116.1 in July, based on signed contracts.  Pending sales were up 2.8 percent from the 113.0 index recorded in July 2011.  July marked the 15th straight month that pending sales were higher than the previous year, but July’s year-over-year increase was the smallest in the past year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“We continue to see a strong demand for housing, but the California market is being hindered by a lack of inventory and multiple offers on what little inventory that is available,” said C.A.R. President LeFrancis Arnold.  “The shortage of inventory has had the most dramatic effect in the REO market, where the available inventory stands at a 1.5-month supply and the share of REO sales dropping 35 percent over the past year.”

Distressed housing market data:

• The share of equity sales – or non-distressed property sales – compared with total sales continued to expand in July.  The share of equity sales increased to 59.5 percent in July, up from 58 percent in June.  Equity sales made up 52.4 percent of all sales in July 2011.

• The share of REO sales statewide shrank further, while the share of short sales increased.  The combined share of all distressed property sales fell to 40.5 percent in July, down from 42 percent in June and down from 47.6 percent in July 2011.

• The share of short sales increased in July to 22.6 percent, up from 21.4 percent in June and from 18.8 percent a year ago.

• Of the distressed properties, the share of REO sales dwindled in July to 17.4 percent, down from 20.2 percent in June and 28.6 percent in July 2011.

• The available supply of REOs for sale remained constricted in July, with the Unsold Inventory Index standing at a 1.5-month supply in July 2012, essentially unchanged from 1.4 months in June.  The July Unsold Inventory Index for equity sales stood at 3.8 months and was 4.2 months for short sales.


Closed housing sales in July by sales type (equity, distressed). • Pending sales compared with closed sales. • Historical trend in the share of equity sales compared with distressed sales. • Housing supply of REOs, short sales, and equity sales in July.

Share of Distressed Sales to Total Sales (Single-family)

Type of Sale July 2011 June 2012 July 2012
Equity Sales 52.4% 58.0% 59.5%
Total Distressed Sales 47.6% 42.0% 40.5%
     REOs 28.6% 20.2% 17.4%
     Short Sales 18.8% 21.4% 22.6%
     Other Distressed Sales (Not Specified) 0.2% 0.4% 0.4%
All Sales 100.0% 100.0% 100.0%

Single-family Distressed Home Sales by Select Counties (Percent of total sales)

County July 2011 June 2012 July 2012
Amador 55% 55% 41%
Butte 43% 36% 32%
El Dorado 55% 44% 42%
Fresno 54% 54% 58%
Humboldt 27% 28% 34%
Kern 62% 48% 45%
Lake 73% 63% 54%
Los Angeles 42% 41% 40%
Madera 86% 57% 74%
Marin 25% 20% 21%
Mendocino 61% 48% 40%
Merced 71% 52% 50%
Monterey 61% 50% 50%
Napa 51% 47% 34%
Orange 32% 31% 29%
Placer 54% 41% 43%
Riverside 62% 52% 55%
Sacramento 60% 53% 54%
San Benito 65% 63% 51%
San Bernardino 65% 58% 53%
San Diego 26% 22% 20%
San Joaquin 63% 61% 59%
San Luis Obispo 42% 34% NA
San Mateo 23% 21% 15%
Santa Clara 28% 23% 23%
Santa Cruz 40% 42% 28%
Siskiyou 44% 59% 44%
Solano 70% 63% 66%
Sonoma 46% 40% 40%
Stanislaus 68% 61% 59%
Tehama 72% 45% 60%
Yolo 56% 46% 47%
California 48% 42% 40%

**Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008. Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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