California's median home price sank at a record level in May, but home sales came hard about in the state's choppy sea of housing.

The median price for single-family homes in the Golden state in May, about $385,000, was down 35 percent from a year ago.

That's the largest year-to-year price drop ever recorded by the California Association of Realtors.

Association President William E. Brown blamed the decline on the depressed values of short sales and foreclosures entering the market. California has one of the highest foreclosure rates in the nation.

But as was reported a month ago, sales activity is picking up in the Golden State. Home sales rose 18 percent in May, exceeding 420,000, at an annualized rate, for the first time since 2007.

Some of the smoother sailing in the sales sector is due to those sinking prices and rising affordability.

Eric Nelson, broker/owner of The Honte Group in Campbell, CA, said the ever-resilient market is luring investors along with speculation that recovery may be on the horizon.

The summer market will offer clues about how much strength the market truly has, Nelson says.

Nelson, a mortgage advisor, has some real grounds for optimism. He works in Silicon Valley, one of only a few major metro areas that saw month-to-month price increases from April to May.

Silicon Valley also came in with the smallest year-to-year home price decline in May when prices were down only 10 percent.

Otherwise, for the year ending in May, the largest home price declines were in the beach front counties of Santa Barbara, down more than 55 percent and Monterey, down more than 48 percent.

"Sales also rose above their year ago levels for the second month in a row after 30 consecutive months of year-to-year decreases. The lower prices associated with distressed sales along with favorable interest rates both contributed to higher sales levels," said CAR's Brown.

"With the statewide median in the $585,000- to $595,000-range through August of last year, we expect the market to continue to experience large year-to-year adjustments through the summer, even if the median price holds steady over the next few months," he added.

Statewide, the 10 cities with the greatest median home price increases in May 2008 compared with the same period a year ago were: Sonoma, 61 percent; Cupertino, 16.7 percent; Mill Valley, 14.6 percent; Los Gatos, 10.2 percent; Sunnyvale, 4.7 percent; Fullerton, 3 percent; Burlingame, 2.1 percent; Santa Barbara, 2 percent; Los Altos, 1.8 percent; Folsom, 0.5 percent.

Cupertino, Los Altos, Los Gatos and Sunnyvale are all in Silicon Valley.