California House Prices Rise, Inventory Falls

Los Angeles, CA, June 26, 2009--The median price for an existing single-family house in California rose for the third straight month.

The median sales price increased to $267,570 in May, an increase of 4.2% from April, according to a report released Thursday by the California Association of Realtors.

The inventory of unsold houses fell to 4.2 months' supply in May compared with 4.6 months in April and 8.7 months in May 2008. Prices were still well below their year-ago levels, down 30.4% compared with May 2008.

One explanation for the increase in housing prices is that fewer foreclosed properties are among those being sold, said Kirk Lesh, an economist for California Lutheran University's Center for Economic Research and Forecasting. Banks tend to sell foreclosed houses at lower prices than do people selling their own homes.

California's real-estate market, the nation's largest, is seen as a barometer of the U.S. economy.

With Thursday's report, real-estate experts said they were a bit more optimistic that the California market is healing. But they warned that the state's 11.5% unemployment rate could result in more foreclosures and drive down real-estate prices again, as could lawmakers' plan to slash more than $10 billion from state spending to close a $24 billion deficit.

The Realtors' report also said that 556,590 California houses were sold in May, up 35.2% from a year earlier.