Home sales in the San Francisco Bay area, one of the priciest U.S. housing markets, sank just under 20 percent in May from a year earlier to mark the 14th consecutive month of sagging sales, according to a report released Wednesday.
With mortgage interest rates on the rise and local home prices at record levels, the pace of home sales in the region, which includes Silicon Valley, has slowed considerably after several boom years.
The local homes market is "rebalancing itself," said Marshall Prentice, president of DataQuick Information Systems, which published the report.
"What we're seeing is stable core demand and a decline in speculative and discretionary buying. These trends should continue through the summer buying season. There is uncertainty about the market after that, tied to broader economic trends," Prentice said.
A total of 9,064 new and resale houses and condos sold last month in the nine-county region, up 8.4 percent from April and down 19.8 percent from a year earlier, according to DataQuick, a La Jolla, California-based real estate information service.
It noted last month was the slowest May for home sales in the San Francisco Bay area since 2001, reflecting how many prospective home buyers are being sidelined by the combined effect of high home prices, more expensive mortgages and stubborn sellers.
"As interest rates have gone up homes have become less affordable, and we're at a point where people are not yet willing to cut asking prices, so there are fewer sales going on," said Cynthia Kroll, a senior regional economist with the University of California, Berkeley's Fisher Center for Real Estate and Urban Economics.
The median price paid for a home last month in the San Francisco Bay area rose to a record $631,000, marking a 0.5 percent increase from April.
Last month's median home price was up 6.1 percent from a year earlier, marking the third consecutive month the region has posted single-digit year-over-year price gains and the slowest such rate of increase for any month in three years.
The UCLA Anderson Forecast said Wednesday that California's economy will experience slower growth through 2008 as its housing market runs out of steam. The economic forecasting unit said the state may lose up to 10 percent of its construction jobs and many home financing jobs.