Business & Economy

Pending home sales: Strongest increase in more than 6 years

File: A sold sign is posted in front of a home for sale in San Francisco.
File: A sold sign is posted in front of a home for sale in San Francisco.
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Pending home sales have risen 17 percent in California, making this the strongest year-over-year increase in more than six years, according to the California Association of Realtors.

The data comes from the Pending Home Index, which looks at properties whose sales are expected to close in 30 to 60 days. The index offers an idea of what lies ahead for home sales. The numbers are rising after low sales last year, which were linked to a lack of inventory in the market.

"Last year was not a strong year for the California housing market. In fact, sales were down 7.6 percent in 2014 compared to 2013," said Leslie Appleton-Young, chief economist with the California Association of Realtors. 

While inventory is still tight, Appleton-Young said that another reason why numbers have gone up is because there is an expectation that mortgage rates will be going up as the Fed is expected to bring rates up. Expectations rose after the stock market adjustment last week. Appleton-Young said there is a feeling the Fed will start the increase in rates in September.

"You've got people with a reason to act now instead of wait later," she said

Pending sales rose from 1.3 percent in June to 9.2 percent in July 2015 for San Francisco, according to a statement. 

Appleton- Young said the Central Valley was seeing a continuous boom.

"The housing there is very affordable, some of the areas 200,000, and that makes it a very attractive for some people," she said. 

Southern California, however, saw no change.

"In Southern California, pending home sales were about flat, " Appleton- Young said. "One of the things you have to realize when you look at an area as large as Southern California, you've got a couple of different dynamics depending on the market."