California housing market continues to post strong gains

California’s housing market continued to improve in May, with home prices posting solid gains for the third straight month and home sales well above last year’s pace, the California Association of Realtors states.

“California home sales were strong in May, continuing the gradual recovery of the California housing market,” said CAR President LeFrancis Arnold. “First-time buyers are recognizing that the housing market has hit bottom and are now seeing a sense of urgency to take advantage of ultra-low interest rates and advantageous home prices.  Additionally, trade-up buyers are returning to the market after sitting it out for the past few years to get in on favorable home prices.”

Closed escrow sales of existing, single-family detached homes in California climbed 3.4 percent from April’s revised 553,670 to a seasonally adjusted annualized rate of 572,260 in May, according to information collected by CAR from more than 90 local Realtor associations and MLSs statewide. May sales surged 21.5 percent from May 2011’s revised 470,910 pace, marking the highest year-over-year sales increase since May 2009. The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the May pace throughout the year and is adjusted to account for seasonal factors that typically influence home sales.

The May 2012 sales pace was the highest since February 2009, when 598,770 homes were sold at a seasonally adjusted annualized rate.

Home prices appear to be stabilizing, with the median home price posting both month-over-month and year-over-year gains for the third consecutive month. The statewide median price of an existing, single-family detached home was $312,110 in May, the highest since September 2010.

California’s housing inventory sank lower in May, with the Unsold Inventory Index for existing, single-family detached homes dropping to 3.5 months in May, down from 4.2 months in April. May’s housing inventory was down from a revised 5.7 months in May 2011. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A 7-month supply is considered normal.