Sales of distressed homes declining
California pending home sales rose higher in September to post the first increase in six months, reversing the sales drop usually observed between August and September. Meanwhile, sales of non-distressed homes made up nine in 10 home sales for the fourth straight month, the California Association of Realtors reports this week.
In San Luis Obispo County, sales of distressed homes declined from 11 percent in Sept. 2013 to just 7 percent a year later.
Pending home sales data
California pending home sales rose in September, with the Pending Home Sales Index (PHSI)* climbing 2.6 percent from 99.8 in August to 102.4 in September, based on signed contracts. The increase was significantly above the average August-to-September month-to-month change of -3 percent observed in the past six years.
Pending sales dipped 0.5 percent from the 102.9 index recorded in September 2013. The year-to-year drop was the smallest since January 2013, when pending sales increased 2.9 percent on a yearly basis. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
Equity and distressed housing market data
The share of equity sales – or non-distressed property sales – remained virtually unchanged in September. Equity sales made up 90.9 percent of all sales in September, essentially flat from the 91 percent recorded in August. Equity sales have been more than 80 percent of total sales since July 2013 and have risen to or above 90 percent for the fourth straight month. Equity sales made up 85.7 percent of sales in September 2013.
The combined share of all distressed property sales continued to stabilize in September and was essentially unchanged from 9 percent in August to 9.1 percent in September. Distressed sales were down nearly 40 percent from a year ago, when the share was 14.3 percent.
Fourteen of the 41 reporting counties showed a month-to-month decrease in the share of distressed sales, with 19 of the counties recording in the single-digits, including Alameda, Contra Costa, Marin, Napa, Orange, San Benito, San Diego, San Mateo, Santa Clara, and Santa Cruz counties — all of which registered a share of five percent or less.
Of the distressed properties, the share of short sales remained at its lowest level since February 2008, holding steady at 4.6 percent in September, unchanged from August. September’s figure was less than half the 9.3 percent recorded in September 2013.
The share of REO sales dipped in September to 3.9 percent from 4 percent in August and from 4.5 percent in September 2013.
The supply of short sales and REO properties eased slightly in September, with the Unsold Inventory Index of REO sales edging up from 2.8 months in August to 3.1 months in September, and from 6.1 months in August to 6.2 months in September for short sales. The supply of equity sales remained unchanged at 4.1 months in September.