Q3 Stats: Bounceback in Pending Sales

If the market's slowing, you might see evidence in the form of a drop in the number of new deals. Fewer buyers buying translates to lower demand, and that can be a first big step toward lower prices.

In the third quarter of 2018, the stats we now have on new deals can lead to different interpretations, but they're mostly upbeat.

First, we have to look back to 2017's numbers.

While 2017 turned out to have the most sales of the past 5 years, it wasn't because Summer 2017 was so hot. Really not.

In a wrapup on market statistics right around this time last year, we noted that there had a sizable drop in newly pending sales (new escrows) initiated during the period of July 1-Sept. 30, 2017 (Q3). It was a 19% drop in new transactions for Q3 2017, compared with Q3 2016.

So here's the good news: Q3 2018 saw a notable rise in new deals, 95 this period versus 82 last year.

You can call that a bounceback of 16%.

So one answer to the chatter you may hear about the market seeming slow is: For the past 3 months, this market's been busier than last year's, and last year's set records.

And these data reflect activity going back 4 whole days. It's not like we're looking way, way back in time.

Now, there is another interpretation, if you want it: Obviously, from our chart, 95 new deals is the second-lowest total of the past 6 years for Q3.

And if you combine that with yesterday's news of a slower pace of closed transactions, maybe everything doesn't smell like roses.

To us, the Summer months in Manhattan Beach this year seemed unusually busy for real estate, especially June and July. (August is always as slow as molasses in January, a phrase we love for its old-timeyness, so thank you.)

Look at the data on new pending sales from another angle, and you'll see a different hopeful sign.

The good news comes from the Sand Section, which has been bumpy for a couple of years, depending on the product. (Houses, we mean.)

Inventory has swollen and some segments of the beach-adjacent market have grown challenging.

But now, something good. Look at the number of new deals in Q3 2018: 36 new escrows is the highest figure we've recorded over 6 years, and the Sand Section was the busiest part of town for the period.

Finally, right?

By these same numbers, the Tree Section had a nice bounceback of almost 50%, too, though new transactions still lag behind 2013-16.

The only drop was in East Manhattan Beach, but we're assuming that is also because of a lack of inventory. If you are looking in East Manhattan, there are fewer options and the best go quickly. So if there's less to buy, there will be fewer transactions.

These data don't tell a complete story, but they certainly don't point to a recent slowdown in local market activity.

Unless you just want to talk about the last 4 days.

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Nerdy note: We hand-crafted these figures based on data published here on MB Confidential every 2 weeks over several years. We simply counted how many properties were newly in escrow as of the report date.

Some of the new escrows would have failed and not proceeded to closing. We do not attempt to account for that specifically, on the idea that similar phenomena affect each year's numbers roughly equally.