Sales of new single-family houses in May were at a seasonally adjusted annual rate of 623,000, according to estimates released by the US Census Bureau and the Department of Housing and Urban Development. This marked a 13.7% slide from the April rate of 722,000 and is 6.3% below the May 2024 rate of 665,000; it is also the slowest sales pace since last October.
The seasonally adjusted estimate of new houses for sale at the end of May was 507,000, a 1.4% uptick from the April estimate of 500,000 and an 8.1% rise above the May 2024 estimate of 469,000. This represents a supply of 9.8 months at the current sales rate, which is 18.1% above the April estimate of 8.3 months and is 15.3% above the May 2024 estimate of 8.5 months.
The median sales price of new houses sold in May was $426,600, a 3.7% uptick from the April price of $411,400 and 3% above the May 2024 price of $414,300. The average sales price of new houses sold in May was $522,200, which is 2.2% above the April price of $511,200 and is 4.6% above the May 2024 price of $499,300.
“On a year-to-date basis, new home sales are 3.2% lower thus far in 2025,” said Robert Dietz, chief economist at the National Association of Home Builders. “As a result of slowing home sales conditions, inventory continues to rise, marking an elevated 9.8 months’ supply in May. Builders will be pulling back on construction in the months ahead due to this level of inventory.”
Sounds like this surplus of homes for sale is evidence that there is NOT a housing shortage in CA. True, home prices are high, but with 40 million people living in CA, that’s going to happen. If CA had a population of 20 million, home prices would fall substantially, and there would be plenty of affordable housing available.
Over-Population (locally, regionally, and nationally) pushes prices up.
There are many states and regions that still have low home prices since many areas are not (yet) over-populated.
The U.S. population has risen to 347 million and is still rising slowly.
California’s population has stayed hovering around 40 million, with tiny ups and downs that people made a ridiculous fuss about (as IF everyone was leaving CA).
And that silly claim was also paired with claims of a housing shortage.
Well, IF everyone was leaving CA, then there would NOT have been a housing shortage.
CA if NOT having a rapid population decline, it has just gone up and down a little bit, but not under 39 million in many years. If the population stays this high, don’t expect home prices to drop in this very over-crowded state.
Where people did leave California to move to more affordable areas, they often did that because they had high equity in their CA homes. Retiring people could sell and buy a nice new home in lower cost states and still have extra money to travel around or even to buy a 2nd home (also in a lower cost state).
However, as other states receive people, home prices have risen rapidly in those states too. Georgia, Idaho, Washington, Oregon, Colorado, Utah, Arizona, Nevada, and Texas have all seen homes prices rise rapidly as people from all over the country seek more affordable states, but that influx of more people moving into those states then pushes prices higher.
The problem of home prices rising is NOT just a California problem. It happens anywhere where people move to get somewhat more affordable housing, so the demand to buy homes rises, and the recurring cycle begins again in those states as home prices rise, often high enough to make homes unaffordable for those who had long resided in those states.
I have relatives who moved to Georgia, Utah, Arizona, and Idaho, and they have enjoyed rising home prices because they bought in BEFORE the boom times happened in those states, but now prices are rising so high that they are shut out of neighborhoods that they once thought they could afford (and they are NOT poor at all).
Too many people makes for high prices for most things (except maybe electronics).