California Housing is finally showing an increase in activity. All I can say is “It’s about time!”
After 18 months of declines, California managed to show an increase in pending monthly home sales on a year-over–year basis in May 2011.
Year over year comparisons are used to compensate for seasonal differences in sales activity. May is compared to May of the previous year, April is compared to the numbers for April one year prior, etc.
As the California Association of Realtors (CAR) graph shows, pending home sales have declined since the height of market activity in July 2008 – a point often referred to as the top of the market.
This chart - courtesy of CAR - shows the California Housing Market has finally shown an increase in Pending Sales. Can closed sales be far behind?
As we all know, the economic landscape of the nation and the world changed dramatically since 2008!
But according to the CAR Pending Home Sales Index (the PHSI), unit sales actually rose in May of this year – up from the month prior and showing a gain of 12% from May 2010.
This is especially good news to homeowners watching and waiting for the depressed real estate market to start showing signs of life.
Because pending sales – or homes recently brought under contract to purchase – are a leading indicator of future real estate activity, it could be a sign that the market has hit the bottom and is beginning to recover.
Some economists are worried, however, that this increase was due more to the arrival of good weather after a rainy early part of the year. Certainly, it takes more than one to good month to make a good market.
As the graph shows, we have a long way to go!
But this good news prompted CAR President Beth Peerce to forecast more good news to come and said this increase “is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010.”
She also predicted the annual sales for all of 2011 would match or exceed the number of sales in 2010.
With bank-owned homes and short sales stubbornly showing the same large share of the market year-to-year, it is clear that there is much to be done before we can honestly say our market is healthy.
But this report does suggest that home buyers – possibly spurred on by low prices and favorable interest rates, are once again putting faith in the California Housing Market.
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