California home sales slowed in May and the statewide median home price continued to rise above that of the previous year due to the still low inventory, according to the California Association of REALTORS® (C.A.R.).
According to the latest C.A.R. report issued this week, there were a total of 391,030 closed escrow sales of existing, single-family detached homes in California in May, marking the seventh consecutive month that sales were below the 400,000 level and the tenth straight decline on a year-over-year basis. Sales in May were down 0.6 percent from a revised 393,480 units in April and 9.5 percent below a revised 432,140 units in May 2013.
Inventory of homes is increasing, but not yet enough to calm prices. For the third straight month the median price of an existing, single-family detached California home increased both month-to-month and year-to-year. May's statewide median price of $465,960 was up 3.7 percent from April's median of $449,360 and 11.7 percent more than the revised $417,140 May 2013 median.
The median has increased year-over-year for the previous 27 months.
The shortage of homes and housing affordability concerns are holding back would-be home buyers, according to C.A.R. officials. "Generally speaking, buyers are feeling less urgency to buy as affordability has become more of an issue and lending standards continue to remain tight," said C.A.R. President Kevin Brown.
"Though housing inventory is up from last year, it's still half of what is considered normal, with some of it being overpriced," added C.A.R. Vice President and Chief Economist Leslie Appleton-Young.
In the San Francisco Bay Area, compared to May last year, sales lagged in all but one of the region's nine counties. Contra Costa County saw a year-to-year increase of 25.7 percent in single-family home sales, while the rest of the region saw slight to double-digit declines in year-to-year sales. Single-family home sales were down 14.6 percent in San Mateo County and down 5.9 percent in Santa Clara County. Month-to-month sales increased 5 percent in Santa Clara County but were down 0.2 percent in San Mateo County.
San Mateo County's May 2014 median of $1,130,000 was 12.9 percent above April's median and 18.9 percent higher than the May 2013 median of $950,000. Meanwhile, Santa Clara County's May 2014 median of $875,580 was down 2.7 percent from the previous month and 6.1 percent higher than the May 2013 median of $824,960.
"The market is not as fast and furious as it was last year, but I don't view the changes as alarming or cause for concern. The market appears to be adjusting. The market cannot support the fast-paced price increases and, understandably, buyers are stepping back, even if interest rates are still reasonable," explained David Tonna, president of the Silicon Valley Association of REALTORS®.
Appleton-Young also sees the easing of market forces as a positive change. "Tempering in home price increases and the recent drop in mortgage rates, however, should help spark the market in the upcoming months," said Appleton-Young.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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