California Home Prices Hit Record High as Market Sales Gain Momentum

The statewide housing market recorded its strongest annual performance in eight months, with sales reaching a seasonally adjusted annualized rate of 268,810 homes. While this represents a 3.1 percent dip from April, the year-to-date figures show a 1.2 percent increase, suggesting a resilient buyer appetite despite tight inventory constraints. The median price rose 2.3 percent from April, a jump that far outpaces the typical historical growth observed between spring months over the last three decades.

A significant factor driving these valuations is a surge in high-end activity. Transactions for homes priced between $1 million and $2 million rose 8.2 percent compared to last year, while sales exceeding $2 million climbed 8.5 percent. Consequently, million-dollar homes now account for a record-high 38.5 percent of all statewide transactions. This concentration in the luxury segment underscores the ongoing affordability gap for middle-income buyers, who face both rising prices and a persistent scarcity of active listings.

According to C.A.R. Senior Vice President and Chief Economist Jordan Levine, the "lock-in effect" remains a primary hurdle. Many homeowners are reluctant to list their properties and forfeit existing low-interest mortgages, which continues to throttle supply. While mortgage rates saw a slight uptick to 6.44 percent in May, market observers remain focused on whether potential easing in geopolitical tensions and interest rate fluctuations will encourage more inventory to enter the market heading into the third quarter.