Highest mortgage rates since late 2023 dampen SoCal home sales

Mortgage rates that surged to their highest levels since late last year hampered home sales in Southern California last month, while the median home price across the state exceeded $900,000 for the second straight month to set another record high, the California Association of Realtors said today.

The median home price in Riverside County remained steady in May since the previous month at $650,000, a 3.3% increase from last year at this time.   

May's sales pace in California dipped 1.1% from the revised 275,540 homes sold in April and were down 6.0% from a year ago, when a revised 289,860 homes were sold on an annualized basis. The sales pace remained below the 300,000-threshold for the 20th consecutive month, and year-to-date home sales were flat, according to CAR.   

Stronger sales of higher-priced properties continued to contribute to solid median price growth, especially since million-dollar home sales in California have been rising more rapidly than their more affordable counterparts in the state. Sales in the million-dollar-and-higher market segment rose 15.5% year-over-year in May, while sales in the sub-$500,000 segment declined by 12.2%. Sales of homes priced above a $1 million now make up 36.6% of all sales -- the biggest share in at least the last five years, figures showed.   

"A persistent shortage of homes for sale, particularly in the more affordable market segments, continued to push up California's median home price to new record highs over the past couple of months,'' CAR Senior Vice President and Chief Economist Jordan Levine said. "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."  

All major regions experienced an increase in their median price from a year ago. The San Francisco Bay Area posted the biggest price jump on a year-over-year basis, increasing 11.9% from last May. Along with Southern California at 10.0%, they were the only two regions recording a double-digit gain from a year ago, CAR found.   

The median price in the Los Angeles metro area remained steady in May since the previous month at $840,000, a 9.8% increase from last year at this time. The median price in Los Angeles County decreased by 1.7%, from $825,970 in April to $811,610 last month.

Orange County saw its median home price decrease 1.2% from April to $1.42 million, 13.2% higher than last year at this time.   

In Southern California, the lowest median price was Imperial County's $405,000, a 7.3% increase from April.   

The statewide median price in May was $908,040, up 0.4% from April and up 8.7% from $835,280 in May 2023.   

The median number of days it took to sell a single-family home in Riverside County was 30 days in May, one day more than in May of last year.