California home prices hit 5-year high

California home prices climbed to a five-year high last month and sales increased as well, placing increased momentum behind the state’s housing recovery.

The median sales price for a home rose 25.9% from last year to hit $340,000 in May, real estate firm DataQuick said Thursday. Sales of new and existing homes jumped 1.2% to 42,293, the most for a May since 2006 when 54,099 homes sold.

Home soldBut while sales increased last month to a multi-year high, they remained 9% below average as tight inventory continued to define the market, DataQuick reported.

The lack of homes for sale, low interest rates, investor demand and an improving economy have caused sharp price increases recently. The median price paid for a home in Southern California rose 24.7% in May from last year, while the Bay Area jumped 29.8%.

Southern California’s housing recovery: An interactive map

The median sale price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general rise or fall in values.

Helping the median rise is the declining percentage of distressed sales. Notices of default — the first formal step in the state’s foreclosure process — fell 10.2% last month from April, according to PropertyRadar.com

Homes that had been foreclosed upon within the last year accounted for 11.4% of homes resold in California — the lowest point since August 2007, DataQuick said. Short sales also dropped last month compared to May 2012.

Read more at latimes.com