Housing Market Improvement
The National Association of Realtors released a report today on adjusted pending home sales. Pending home sales are when people enter into contracts to purchase homes. The good news is that this figure increased 3.3% from the prior month, unfortunately, the index itself was down 2.1% from the same period a year ago.
On a regional basis, the pending home sales increased in the South and in the West, though the index for both regions remains below its levels seen in July 2013.
The Standard & Poor’s/Case-Shiller 20-city home price index released earlier this week, showed a rise of 8.1% in June as compared to June 2013. So far for this index, the average year over year home price again was just over 13% so far in 2014.
Naturally, when home prices increase, the affordability of homes decreases. Here in California, the California Association of Realtors’ Traditional Housing Affordability Index, the percentage of home buyers who could afford to purchase a median-price, existing single-family home in California dropped from 33 percent in the first quarter of 2014 to 30 percent in the second quarter of 2014.
Now, as the housing affordability fell in 19 of 26 counties in California, statewide this index has dropped 26 percent since first quarter 2012!
So, let’s change gears from talking about home price appreciation to talking about California home sales. Yes, the latest CoreLogic DataQuick report showed that California home sales declined in July compared to the same time last year.
On of statewide basis, California showed 39,608 new and resale houses and condos sold in July, which was an 8.7 percent drop from July 2013, according to CoreLogic DataQuick.
In my opinion, this home sales figure is actually more important than the home appreciation numbers. This is because home sales are the driving force in creating home appreciation. So, the drop in California home sales of 8.7% from July 2013, in my opinion, is definitely a red flag for the housing market in California!
Because this drop in California home sales comes at the traditional strongest seasonal period for home sales, its significance should not be overlooked.
