California for-sale inventory at 2005 levels

Inventories of homes for sale in California continued to shrink in May, as the highest pace of sales since February 2009 reduced the supply of available homes to just 3.5 months -- down from 4.2 months in April and 5.7 months at the same time a year ago.

Many housing analysts view a six-month supply of homes as a good balance of supply and demand -- anything less means there are not enough homes to meet demand.

"Low housing inventory continues to be the critical issue in the California market," said California Association of Realtors Chief Economist Leslie Appleton-Young in a statement accompanying the release of the latest numbers. "Inventory levels have not been this low since December 2005, when the supply matched the current level."

Sales of existing, single-family detached homes were up 3.4 percent from April, to a seasonally adjusted annual rate of 572,260 in May, CAR said. That's the fastest pace of sales since February 2009, when homes were selling at a seasonally adjusted rate of 598,770 per year.

The San Francisco Bay Area had the greatest shortage of homes for sale, with inventory levels in the two- to three-month range for Santa Clara, San Mateo, Alameda and Contra Costa counties, Appleton-Young said. A seven-month supply is normal, CAR said in releasing data from more than 90 Realtor associations and multiple listing services.

The inventory figures could provide ammunition to critics of plans to allow bulk sales of Fannie Mae and Freddie Mac real estate owned (REO) properties. The National Association of Realtors has urged that such programs be "implemented on a strictly limited, as-needed basis," citing estimates by analysts at Barclays Capital that private investors are converting 800,000 homes a year into rentals.

Fannie and Freddie's federal regulator, the Federal Housing Finance Authority (FHFA), has said it will approve bulk sales only in markets where there's a glut of properties on the market.

The first "REO to rental" sale of 2,490 Fannie Mae "real estate owned" (REO) properties will be limited to eight markets: Atlanta (572 properties); Los Angeles-Riverside, Calif. (484 properties); Phoenix (341 properties); Las Vegas (219 properties); Chicago (99 properties); Southeast Florida (418 properties); Central and Northeast Florida (190 properties); and Western Florida (167 properties).

But last month, California Realtors got behind a bill introduced by Rep. Gary Miller, R-Brea, that would prohibit bulk sales of Fannie Mae REO homes in the state.

Months' supply of housing, May 2012

Source: California Association of Realtors

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