Font ResizeThe Bay Area's median home price was $595,000, up 17.6 percent from May 2004, when the median price was $506,000, La Jolla-based DataQuick Information Systems said Thursday. The median price is the point at which half of the homes sold for more and half sold for less.
"I'm not going to make any predictions, but I wouldn't be surprised to see bigger deflation than we have and the prices cooling off," said Cynthia Kroll, an economist at the University of California, Berkeley. "I see the whole housing market stretched to the limit."
The summer months typically see inventory increase because owners sometimes wait until school is over to sell their homes, said Terry Kulka of Coldwell Banker Residential Brokerage in Oakland.
"The sky is not falling, but it does seem to be slowing down a bit because of this increased inventory," she said. "I think this is a good time to be a buyer."
Even though prices increased, the total number of Bay Area homes sold fell 6 percent from May 2004 to 11,308 last month. Last year's total of 12,028 homes sold was the highest volume for a May since DataQuick began keeping statistics in 1988. Last month was the second-strongest May.
But DataQuick President Marshall Prentice believes there's still upward pressure on prices. Low foreclosure
"Market trends are remarkably stable," Prentice said. "The only change we see for the immediate future is a slowing rate of appreciation."
Alameda County's median home price in May was $573,000, up 17.7 percent from a year ago, while the number of homes sold was down 12.6 percent to 2,155.
"With the Alameda market, they are still having three to seven offers on a house, which is still keeping it a nice market for the sellers," said Melody Royal, regional manager of Prudential Realty in Alameda. "It's not just inventory; it's how you market the property."
Strong demand and low interest rates are helping fuel a national housing boom, which is reflected in figures that show construction of new homes rose 0.2 percent in May.
The May increase left construction of new homes and apartments at an annual rate of 2.009 million units last month, up from 2.005 million units in April, when construction activity jumped by 9.4 percent. Housing starts have been above the 2 million annual rate in seven of the last 10 months.
"We still have a red-hot housing market," said David Seiders, chief economist of the National Association of Home Builders. "Surveys of both lenders and builders are showing tremendous ongoing strength with little or no hints that anything is starting to fall."
The Associated Press contributed to this report.
