The California Association of Realtors (CAR) recently reported that the median price for a home in California increased by 8% in May, although the total sales were down by 21.2% as compared to last year.

This is the first time since November 2001 that the median price did not increase by a double-digit percentage, but the current growth rate is still very healthy. California overall had almost a six-month supply of inventory in May, although some regions may have less inventory than others.

Interest rates are definitely affecting the pace of home sales, but they still remain at a reasonable level. For May 2006 the rates for a 30-year fixed mortgage averaged around 6.6%, up from May 2005 where the rate was 5.72%. Also increasing is the number of days to sell a home, with the average at 44 days for May 2006 as compared to 27 days for May 2005.

Top economists say that California is returning to a more balanced market, with healthy but slower rates of appreciation and more normal inventory levels overall.