Contracts are an early indicator of where sales are headed. Sales often close six to eight weeks after contracts are signed so a decline in June could mean weakness when July and August sales statistics are reported.
In a healing market, sales should be accelerating as buyers gain confidence that their investments wonâ€™t be worth less in the future than what they pay today.
But as The Times previously reported,Â a lack of inventoryÂ has become a critical dynamic of the market. And perhaps more important than the sales statistics released Tuesday are the figures from the association showing a decline in the number of foreclosed homes selling.
Bank-owned homesÂ helped fuel the sales market earlier this yearÂ as big and small investors stormed into Californiaâ€™s market.
Last month, foreclosed homes made up just 20.2% of all pending sales last month, a decline of 22.6% from May and 29.2% in June 2011. There were similar declines for foreclosures in closed sales,Â as The Times reported last week.
The California Assn. of Realtors blamed the drop in pending sales in part on the slowing economy. But as Times staff writer Ricardo Lopez reported last week,Â Californiaâ€™s economy appears to be accelerating. Nevertheless, fears of a sluggish economy and tight credit also probably play some role in the summer sales slowdown.