Rising interest rates begin to show effects even as prices set another record in May

While the statewide median price continues to set another record, California’s housing market has started showing signs of a market shift. As the monthly average 30-year fixed rate

mortgage surpassed 5% for the first time since April 2010, statewide home sales in May fell to their lowest sales level since June 2020. This was the largest year-over-year decline in five months, according to the California Association of Realtors.

In Silicon Valley, home sales also fell year-overyear, but other indicators show the market remains relatively strong, according to Mlslistings data.

C.A.R.’S latest housing market report indicates sales of existing, single-family homes in California totaled 377,790 in May, down 9.8% on a monthly basis from 419,040 in April and down 15.2% from a year ago, when 445,660 homes were sold. While public health concerns and market uncertainty were triggering factors that resulted in the sales decline two years ago, tight supply and the higher cost of borrowing are responsible for the near doubledigit decline this time around, according to C.A.R.

“We’re beginning to see signs of a more balanced housing market with fewer homes selling above list price and homes remaining on the market a little longer than in previous months,” said C.A.R. President Otto Catrina. “What this tells us is that there is slightly more supply, fewer- and less-intense bidding wars, and those who’ve experienced ‘buyers’ fatigue’ may now have a window of opportunity.”

California’s median home price set another record at $898,980 last month, surpassing the record set in April of $884,890. The May price was 1.6 percent higher than the April median price and 9.9 percent higher than the $818,260 recorded last May. This can largely be attributed to the mix of sales with the high-end market continuing to outperform the more affordable market segments.

In San Mateo County, the C.A.R. report indicates the number of home sales in May was down 11.7% from the same month last year, and up 4.7% from April. The May median price of $2,231,500 was 7.5% higher than the

May 2021 median of $2,075,000 and down 7.1% from the April median price of $2,401,000.

Mlslistings reports May’s inventory in San Mateo County was at 479, up 15% from April and down 1% from May 2021. The number of new listings was down 9% over April and May of last year.

In Santa Clara County, sales were down 21.2% from a year ago and down 8.2% from April. The May median sales price of $1,927,500 was 15.1% higher than the median of $1,675,000 in May 2021, and down 2.2% from the April median of $1,970,000.

Inventory in the county was at 1,153, up 30% from April and up 26% from May 2021. The number of new listings for May was up 3% over April, and down 5% from May of last year.

“The median price increased so rapidly in the past couple of years that we are now seeing home prices slowly leveling off, particularly in some cities that could not sustain the high home prices. However, all indications continue to show the region’s relative market strength. Overall, Silicon Valley’s market still appears competitive as homes continue to sell above list price,” said Brett Caviness, president of the Silicon Valley Association of Realtors.

According to Mlslistings, the median sales-to-list price ratio is 112 percent in Santa Clara County and 113 percent in San Mateo County. The median days homes are staying on the market in both counties is eight days.

“The good news for homebuyers is new listings and inventory appears to be bouncing back, particularly in Santa Clara County,” added Caviness. “For sellers, pricing a home properly will be the key to attracting buyers.”