California’s Greatest Obstacle Is Shrinking Inventory

Things are looking up in California.

Pending-home sales are continuing to rise on an annual basis; median prices are rising; and equity sales are starting to make up a larger portion of total sales, according to the ""California Association of Realtors"":http://www.car.org/ (CAR).

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California's pending-home sales have been rising year-over-year for the past 12 months, according to the California Association of Realtors' (CAR) ""Pending Home Sales Index"":http://www.car.org/newsstand/newsreleases/2012releases/aprilphsi released this week.

However, despite the year-over-year gains, April's pending home sales demonstrated a decline from March.

Pending-home sales include contract signings but not closings. The index is based on 2008 contract signings with an index score of 100 equaling the average amount of contracts signed per month in 2008.

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The pending-home sales index for March was revised to 138.9, and April's index came in almost 11 points below at 128. While lower than the March index, April's index showed growth from last April's index of 114.4.

CAR's president, ""LeFrancis Arnold"":http://www.car.org/aboutus/carleadership/lefrancisarnold/, attributed last month's fall in pending sales to ""inventory constraints.""

""The tight inventory we've been experiencing in the distressed market over the past several months is now spreading to equity properties, essentially affecting the supply conditions of both the distressed and non-distressed markets,"" Arnold said.

CAR's chief economist, ""Leslie Appleton-Young"":http://www.car.org/marketdata/speeches/lesliebio/, concurs that ""inventory is scarce in all price ranges,"" and in fact stated with the release of California's ""existing home sales report"":http://videos.car.org/?bcpid=987216733001&bckey=AQ~~,AAAAzBtBmCE~,gKfMMlGoPZI5kU4oXdOB9V1GODmgg1BX&bclid=969047625001&bctid=1649379781001 earlier this month that inventory is ""the biggest issue"" right now in California's housing market.

Appleton-Young reported a 4.2-month housing supply in April. This compares to a 6.2 month supply for the nation overall, according to the ""National Association of Realtors"":http://www.realtor.org/ latest ""report."":http://www.realtor.org/news-releases/2012/05/april-existing-home-sales-up-prices-rise-again

Equity sales ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô non-distressed sales ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô continue to make up more than half of the state's sales, rising from 54.4 percent in March to 58 percent in April. Last month's rate was the highest reported since July 2008.

As distressed properties tend to sell at lower prices, this can have a positive impact on prices. The median home price in April in California was $308,050, marking the first time prices have risen above $300,000 since December 2010, according to the existing home sales report released earlier this month.