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California supply shortage keeps lid on pending-home sales in January

A paucity of for-sale properties that's been a theme across much of the country has come to the Golden State, evidenced by a drop in pending-home sales in January, new numbers suggest.

Statewide, roughly 3 percent fewer prospective homeowners signed contracts last month to buy a new home versus the same time last year, according to just-released statistics from the California Association of Realtors. Specifically, CAR's Pending Home Sales Index slipped to 98.5 from 95.6. On a month-over-month basis, however, signed contracts rose by just over 21 percent.

January is typically a slow month for real estate transactions due to inclement, snowy weather conditions across the better half of the country. That's not as much of a problem in California, thanks to its seasonal climate. This often translates into greater home sales activity, but the scarce amount of supply this time around prevented the country's most active market from seeing more growth. A normal market has between five and six months' worth of unsold inventory. In January, the state had a four month supply, based on CAR's data, on par with the national average. 

Pending home sales drop in most counties, regions
The year-over-year drop in pending sales was apparent in just about every region or county. In Santa Clara County, for instance, residential real estate contract signings in January dropped by more than 10.5 percent, over 5 percent in Orange County and 4.1 percent in Southern California, according to CAR's analysis. Only two regions – San Francisco and Monterey – registered gains, up 2 percent and 9 percent, respectively.

High asking prices also had a chilling effect on California's real estate climate through the first 31 days of 2016. At 54 percent, the majority of properties purchased were bought either at or above the initial asking price. In fact, two-thirds of properties had more than one offer put on them, up from 58 percent with multiple offers January of last year. A median valued single-family residence in the Golden State went for $468,330, which is down 4.3 percent from December but 9.2 percent north of the median 12 months ago.

$940,000 for median single-family unit in San Jose
Four of the five most expensive housing markets in the country are found in California, according to a report issued earlier this year by the National Association of Realtors. None is more expensive than in San Jose, where a median priced home goes for $940,000. San Francisco and Anaheim also command top dollar for residential real estate at north of $700,000 in each.

Thanks to mortgage rates that continue to be quite low, rising property values have not been a significant deterrent. Nearly two full months into 2016, interest rates have yet to climb, even though they were forecasted to rise by economists. During the week ending Feb. 25, 30-year fixed rate mortgages averaged 3.6 percent, according to Freddie Mac's latest Primary Mortgage Market Survey. That's down slightly from the previous seven-day period, as well as the same stretch last year when they averaged 3.8 percent.

Sean Becketti, chief economist for the mortgage lending giant, noted that since Jan. 1, 30-year rates have fallen by close to 40 basis points.

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