California’s housing market was hotter than it’s ever been in April, and it appears that intensity may have been a little too much for the Golden State’s residents.
According to a new report from the California Association of Realtors, homebuyers in California began to exhibit “buyer fatigue” in May due to the lack of available inventory, record high prices, and incredibly competitive market.
The report showed that California home sales declined by 2.7% in May, with potential buyers choosing to stay on the sideline rather than pursue homeownership in this market.
"The overheated housing market is showing signs of a much-needed cooling and could be a sign of waning buyer interest as the torrid pace of home price increases and buyer fatigue adversely affected demand," CAR President Dave Walsh said in a statement. "We're seeing many would-be buyers taking a break and hoping to see more listings as the economy reopens and prospective sellers list their homes for sale."
However, while home sales fell a bit, home prices did not.
According to the CAR report, California home prices set another record in May, with the statewide median home price climbing to $818,260. That’s up nearly 40% from last May’s total of $588,070 and up from April’s previous record total.
The report notes that “robust demand” for high-dollar properties drove the record-breaking increase. According to CAR, million-dollar home sales have risen by more than 200% from May 2020.
Put another way, “more million-dollar properties were sold in the past couple of months than homes priced below $500,000,” CAR states in its report.
Homes in California also continue to sell basically just as quickly as they hit the market. According to CAR’s report, the median number of days it took to sell a single-family home in California remained at seven days in May, the same as it was in April.
On the positive side, the number of listings on the market is on the rise, hitting the highest level in six months.
"A lack of housing inventory continues to push up prices, and modestly higher interest rates, increased competition, and declining affordability have caused some buyers to become discouraged,” CAR Vice President and Chief Economist Jordan Levine said.
“Despite strong growth rates, the level of home sales has fallen on a monthly basis in four of the last five months. Additionally, pending sales data for May, which was virtually unchanged from April, suggests further slowing in coming months,” Levine continued. “Fortunately, new listings have finally started to rise, which could help to sustain a higher level of home sales deeper into summer by providing much-needed supply.”