California’s housing market rebounded in May as existing home sales and median home price recorded strong gains on both a monthly and annual basis, a trend in every major region of the state, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said this week.
Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 14th consecutive month and totaled a seasonally adjusted annualized rate of 430,060 units in May. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the May pace throughout the year. The May figure was up 5.4 percent from the revised 408,030 level in April and up 2.6 percent compared with home sales in May 2016 of a revised 419,000.
“Mortgage rates dropping to the lowest level since November could have been a motivating factor for the sales increase in May,” said C.A.R. President Geoff McIntosh. “The low interest rate environment, however, may not last long as the Federal Reserve’s gradual rate hike and plan to reduce its balance sheet will likely lead to higher rates and could change the momentum of the market.”
The statewide median price stayed above the $500,000 mark for the third straight month and reached the highest level since August 2007. The median price was up 2.3 percent from a revised $537,920 in April to reach $550,200 in May, and was 5.8 percent higher than the revised $519,930 recorded in May 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.
“Despite a solid performance thus far in the spring housing market, the continued mismatch between buyers and available homes for sale that’s driving up home prices remains an issue,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Stubbornly low supply levels will continue to propel prices higher and, when combined with imminently higher interest rates, will worsen an already dismal affordability situation in the housing market.”