California home prices hit record-high

California home prices hit a record-high in May, topping $900,000 for the second straight month. 

The California Association of Realtors released its May home sales price report this week, showing that high mortgage rates are dampening home sales even though the median home price is at an all-time high. 

The big picture: Sales in May set an annual rate of 272,410, a 1.1 percent drop from the 275,540 sales rate in April and down six percent from 2023. 

• The statewide median price hit $908,040, the second straight month breaking the $900,000 threshold and up 8.7 percent from $835,280 in 2023. 
• May was the 11th straight month of annual price increases for California. 
• The California Association of Realtors expects seasonal factors and tight housing supply conditions to continue to put upward pressure on home prices in the coming months. 

Zoom in: Million-dollar home sales have risen faster than more affordable homes throughout California, according to the association. 

• Homes selling at at least $1 million rose 15.5 percent from May 2023. 
• On the other hand, sales in the sub-$500,000 market declined by 12.2 percent over the same period. 
• The $1 million and higher market made up 36.6 percent of all sales, which is the largest share in at least the last five years. 
• The median price for homes in the Central Valley increased by 4.6 percent year-over-year. 

State of play: The median number of days it took to sell a single-family home was 16 in May, down from 17 days in May 2023. 

• The sales-price-to-list ration was 100 percent, and the statewide average price per square foot increased from $407 the year before to $446. 
• Fixed-mortgage interest rates for 30-year terms averaged 7.06 percent in May, an increase from 6.43 percent the previous year. 

What they’re saying: “California home sales stalled in May as mortgage rates reached the highest level in five months and may have contributed to the slowdown in market activity,” said C.A.R. President Melanie Barker. “However, a moderation in interest rates in the past couple of weeks and recent improvements in housing inventory could create an opportunity for motivated buyers to reenter the market before the homebuying season peaks.”

• Association Senior Vice President and Chief Economist Jordan Levine said a persistent shortage of homes for sale, particularly in the more affordable market, continued to push the median home price up. 
• “With mortgage rates coming back down from their recent peaks and market competition heating up, the statewide median price may have more room to grow before the summer ends,” Levine said.