California home prices increased by the most in 33 years as a result of strong sales growth in higher-priced markets and continued housing supply shortage, pushing up median home prices in May, the California Association of Realtors said.
Closed escrow sales of existing, single-family detached homes totaled a seasonally adjusted annualized rate of 431,370 units, the report noted.
Meanwhile, sales were up 1.9% in May, up from a revised 423,420 units in April, but down 3.6% from a revised 447,530 last year.
The statewide figures represents what would be the total number of homes sold during 2013 if sales maintained the May pace throughout the year and is adjusted to account for seasonal factors that influence home sales, CAR explained.
"It’s encouraging to see median home prices across most parts of the state continuing to recover. The Bay Area, in particular, has been experiencing strong price appreciation, thanks to the region’s robust economic growth, extremely low housing inventory, and an increasing demand from international buyers," said CAR President Don Faught.
He added, "San Francisco County’s median home price, for example, increased 28% from last May and has just surpassed its previous record high reached in May 2007."
The median price of an existing, single-family detached home rose to $417,350 in May, up 3.6% from $402,706 in April and also rose 31.9% from the previous year, marking 15 straight months of annual price increases, CAR noted.
The year-over-year increase was the highest since at least 1980, when CAR began tracking the data.
"While home prices are increasing at levels above those observed in 2006-2007, the fundamentals of the housing market are much more solid than what we experienced a few years ago," said CAR chief economist Leslie Appleton-Young.
She added, "More home buyers are putting down larger down payments, and many of them are opting for more stable loan products."
However, not all cities within California are showing such positive housing recovery news.
For instance, Mortgage Resolution Partners recently entered into contracts with additional municipalities to form the use of eminent domain programs, including Richmond, Calif.
The use of these programs is to seize or restructure underwater residential mortgages, many of which are bundled into private-backed securities.
The available supply of home for sales dipped in May, and was down markedly from a year ago.
The May Unsold Inventory Index for existing, single-family detached homes was 2.6 months, down from 2.8 months in April and down from a revised 3.6 months from the previous year.
Meanwhile, homes sold quicker in May, with the median number of days it took to sell a single-family home decreasing to 27.1 days in May, down from 27.9 days in April and also dropping from a revised 45.7 days last year, the report noted.
Mortgage rates ticked up in May, with the 30-year fixed-mortgage interest rate averaging 3.54%, up from 3.45% in April, but down from 3.8% a year earlier, according to Freddie Mac.
"Historically low mortgage rates have reduced monthly mortgage payments substantially, making owning a house more affordable, even with rising home prices," Appleton-Young concluded.