Even with a strong performance in May closed escrow sales, California pending home sales fell for the fifth consecutive month; suggesting the state’s housing market may underperform over the next few months, the Arcadia Association of Realtors said today.
Along with the decline in pending sales, realtors are more cautious due to their growing concern over supply and affordability issues. Realtors also saw fewer floor calls, and less open house traffic than in April.
Despite a bounce back in May closed escrow sales, the downward trend in pending home sales suggests the housing market may underperform over the next few months. With interest rates expected to rise in the second half of the year, the sales momentum could slow further or even shift in the third and fourth quarters.
The Southern California Region reversed a three-month decline and posted a 1.3 percent improvement in pending sales from the previous year, aided largely by healthy gains in Orange and Riverside counties, which marked increases of 12.5 percent and 8.4 percent, respectively. Pending sales in San Diego, San Bernardino, and Los Angeles counties declined from last May, but those counties had drops of less than 5 percent.
The Central Valley also posted a slight gain in May, increasing 2.1 percent. With many counties in the region falling behind last year, pending sales in the region as a whole would have declined year over year if not for solid sales in Fresno, which increased a robust 28.6 percent from last May. Kern County saw pending sales slip by 2.9 percent from May 2016.