Record-setting home prices for second straight month in May
Sales top 400,000 for first time in 10 months
Lower mortgage rates helped jump-start a sputtering housing market in May, with home prices reaching a new record for the second straight month — and the most sales in 11 months.
It was an about-face for a housing market that had slowed dramatically in recent months, as would-be buyers held off and took a wait-and-see approach to the market. But mortgage rates at the lowest level in almost 18 months and more listing encouraged more consumers to become buyers.
‘Housing market remains soft’
Home sales climbed to an annualized rate of 406,960 units in May, a 2.6% boost compared to April but off 0.6% from a year ago, according to the California Association of Realtors. It was the first month to exceed the 400,000 sales level since July 2018.
“The lowest interest rates in nearly a year and a half, no doubt, have elevated housing demand as monthly mortgage payments have become more manageable to homebuyers in general,” says CAR president Jared Martin. “The state’s housing market remains soft , however, as home sales continue to lag behind last year’s level for more than a year now.”
‘Lower interest rates have spurred buyer demand’
Home sales may be “soft,” but home prices remained strong for the second straight month. The median-home price reached a record $611,190, a 1.4% increase from April and up a modest 1.6% from a year ago.
“While lower interest rates have spurred buyer demand in recent months, they also have played a role in ongoing price hikes,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “Buyers could offer higher prices without hurting their bottom lines and maintain the same level of affordability, as rates remain on a downward trend. With mortgage rates expected to stay low in the upcoming months, home prices may inch up further for another month or two before cooling off.”
Affordability has been a big concern for many buyers, with only about one of every three households able to buy the median-priced home in the state. The Bay Area, as always, was the most expensive market, with four counties topping $1.34 million.
San Mateo County’s $1.77 million median-home price was the highest in the state, followed closely by San Francisco at $1.7 million. Lassen County was the most affordable at $205,000.
Home prices, sales compared to a year ago
$1.7 million, up 4.8%; sales down 0.8%
$650,000, up 1.6%; sales up 0.2%
San Luis Obispo
$640,000, up 0.2%; sales up 4.1%
$539,480, up 0.5%; up 0.1%
$385,000, up 2.7%; sales down 5.7%
Active listings increased 7.4% in May compared to a year ago.
Those listings would take about 3.2 months to sell, compared to 3.0 months in May 2018.
Time on the market
The average home on the market sold in 18 days in May vs. 15 days a year ago.