Good time to buy? Maybe, if you can afford to
California’s housing market is battling a significant slowdown, as home prices and sales slowed in May, the latest evidence that consumers are concerned about the economy, jobs and the uncertainty surrounding tariffs.
A seasonally adjusted annualized rate of 254,000 homes sold in May, a 5.1% decline from April and off 4% from a year ago, according to the California Association of Realtors. Home sales have dropped for three straight months and are at the lowest pace in four months. The annual decline was the largest since December 2023.
Fewer than 300,000 homes on an adjusted annual basis have sold for the past several months in California, as buyers hold off and sellers wait. Housing experts say at least 300,000 homes are the minimum number for a healthy market.
What does seasonally adjusted annualized rate mean?
The number of homes that would sell over a one-year period at the current pace — or about 21,000 per month in May.
Six of the seven regions endured annual declines in sales, including 7%-plus drops in the Bay Area, Los Angeles, Southern California (think Orange County and San Diego) and the Central Coast, from Santa Barbara to Santa Cruz. Only the Far North, from about Chico to Crescent City, eked out a gain at 0.5%.
“Lower prices are making homes more affordable, and the growing inventory means buyers have more choices,” said CAR president Heather Ozur, a REALTOR in Palm Springs. “It’s a rare window where people can find their ideal homes at a good value, making now an ideal time to buy.”
Prices remain above $900,000
Well, sort of.
Home prices dipped 0.9% from a year ago to $900,170 in May. Fewer than one of every five households can afford to buy at the current price, according to CAR.
Only two of the seven markets had median home price declines in May compared to April, but the Bay Area — the second-largest market in the state – and the Far North had 3.8% drops, exceeding the modest gains in other markets.
New listings had a double-digit increase for the fifth straight month, as homebuyers hold off and more sellers are giving in to the idea of a sluggish summer.
“Although the market has slowed in recent months, there’s potential for a rebound if economic concerns subside,” said Jordan Levine, CAR chief economist and senior vice president. “Consumer sentiment appears to have bottomed out and is now showing signs of improvement, which could support a stronger housing market in the second half of the year. Buyers may take advantage of improved conditions, including deeper price reductions and increased housing inventory.”
Home prices and sales in May compared to a year ago
| Region | Median home price | % gain or loss vs. a year ago | Home sales vs. a year ago |
|---|---|---|---|
| California | $900,170 | -0.9% | -4.0% |
| Bay Area | $1.4 million | -3.8% | -8.2% |
| Central Coast | $1.13 million | +6.2% | -8.4% |
| Central Valley | $510,000 | +0.6% | -5.2% |
| Far North | $385,000 | -3.8% | +0.5% |
| Inland Empire | $610,000 | +1.9% | -5.4% |
| Los Angeles | $855,000 | +1.8% | -8.3% |
| Southern California | $888,000 | +0.9% | 7.6% |
Source: California Association of Realtors
