California pending home sales fell in September while inventory rose

Buyers signed fewer contracts for California homes last month as the housing market entered a typically slower period and declining affordability sapped demand.

The California Assn. of Realtors said that its pending sales index fell 1.8% in September from August. The index—released Tuesday—is based on contracts signed, but not yet closed and provides a look into future sales.

The market typically slows in the fall and winter as families decide to put off moves with their children back in school and the holidays approaching. The Realtors group said pending sales fell slightly less from August than they had, on average, over the last five years.

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But pending sales were down 8.1% from September of last year, a time when housing was markedly less expensive.

The red-hot housing market has cooled lately as owners have increasingly put their houses on the market at the same time buyers have pulled back—because of seasonal factors and the higher cost of housing.

Inventory expanded in September—the fifth straight month it did so, the trade group said. There was a 3.5-month supply of non-distressed houses for sale in September, up from 3.1 months in August. Still, supply remains tight. Experts consider about a six-month supply of homes for sale to be normal.

Higher home prices have hammered affordability, but they have also helped improve the market’s health. The share of equity sales increased in September for the 10th consecutive month. Non-distressed sales accounted for more than 80% of California sales last month—the highest share since fall 2007.

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