Prices soar to record in May, sales plummet to one-year low
By Ron Trujillofirstname.lastname@example.org
California home prices reached a record high in May, surpassing the previous peak set during the last housing boom.
The state’s median-home price climbed to a record $600,860, easily exceeding the previous record of $594,530 in 2007. The current price increased 2.8% compared to April and up 9.2% from a year ago, the largest annual gain since May 2014, according to the California Association of Realtors.
The Bay Area definitely helped generate the record-setting month, with home prices increasing 16.4% to $1.088 million — or a head-turning $153,000. Five of the nine counties in the region have median-home prices of $1 million or more, led by San Francisco at $1.62 million, the priciest market in the state. San Mateo was a close second at $1.6 million.
“As we predicted last month, California’s statewide median-home price broke the previous pre-recession record … and hit another high as tight supply conditions continued to pour fuel on the price appreciation fire,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “With inventory starting to show signs of improvement, however, home price appreciation could decelerate in the second half of the year, especially since further rate increases are expected to hamper homebuyers’ affordability and limit how much they are willing to pay for their new home.”
The Federal Reserve recently increased the overnight rate by a quarter-point and is expected to increase rates a few more times this year.
Higher home prices and interest rates coupled with a lack of inventory affected home sales in May, which dipped 1.8% from April and off 4.6% compared to a year ago. The decline was the first annual drop in four months and the 409,270 seasonally adjusted units sold was the lowest level in more than a year.
“The softening in May home sales was due in part to the spike in interest rates in mid-April, when the 30-year fixed mortgage rate jumped 20 basis points in just one week to reach the highest level since 2014,” says CAR president Steve White. “Homebuyers may have postponed escrow closings to wait out the effects of the rate surge. Looking ahead, higher mortgage rates and elevated home prices will heighten affordability constraints that will likely temper the housing market in the coming months.”
Fewer than one of every three households could afford the median-priced home in the state during the first quarter, according to CAR. In another report, no county is considered affordable for a middle-class family in the respective region, according to ATTOM Data Solutions.
County-by-county home prices and home sales data is available online.
Home prices compared to a year ago
$1.62 million, up 7.9%
$680,000, down 6.2%
$640,000, up 5.8%
$536,940, up 9.1%
$279,980, up 12.0%