The C.A.R. unsold inventory index was 4.6 months during the second quarter 1998, down from the 6.6 months recorded during the first quarter of 1998, and down from 6.9 months during the second quarter 1997. Current inventory levels support the expectation of widespread home price appreciation throughout California even if sales slow a bit. View Graph . Housing affordability is beginning to erode slowly. This is down 6 percentage points from the fourth quarter 1996, when California housing affordability peaked at 43 percent.
Further erosion is possible if price hikes continue.