California home prices rose slightly in May and sales fell as the market showed signs of stabilizing.
The median sales price climbed 0.8% from April to $386,000, research firm DataQuick said Thursday. Prices rose 13.5% from a year earlier, the smallest annual gain since August 2012.
The spring selling season has been muted this year, as investors pull back and families struggle to afford a home. Buyers scooped up 37,734 new and resale houses and condos in May, down 0.7% from April and 14.4% from May of 2013. Sales usually increase from April to May, DataQuick said.
But experts say the cooling doesn’t foreshadow a deeply troubled market. Rather, it represents a return to normalcy. The state’s two major regions both saw price gains slow last month. Experts welcomed the trend, saying last year’s shocking increases were unsustainable.
In the six-county Southern California region, prices rose 11.4% from a year earlier to $410,000, the slowest pace since August 2012. Prices in the tech-flush Bay Area climbed 18.9% to $617,000, the smallest rise in 19 months.
“Virtually all the technical indicators are pointing in the direction of more market normalization,” DataQuick analyst John Karevoll said upon releasing the Bay Area figures Thursday. Still, he called that rate of change in the Bay Area “pitifully incremental.”
Prices there, Karevoll said, are on pace to surpass their pre-recession peaks this summer. Underpinned by a booming tech industry, the region’s housing market has remained stronger than Southern California. Home sales rose from April in the nine-county Bay Area, while in Southern California they fell 2.3%.
Sales dropped in both regions compared with May 2013, a time when the housing market was humming. Investors are no longer buying homes en masse, because the foreclosures and other cheap properties they covet are in short supply. Families, however, have struggled to fill that void — in part because of the high cost of housing.
Statewide, sales of foreclosed homes continued to fall. Such deals accounted for 6% of all resales last month, down from 11.3% a year earlier. Short sales also declined from a year earlier.