Sales of homes in Bay Area nosedive

The number of Bay Area homes sold in August plunged by 10 percent year over year due to the scarcity of affordable homes. Activity was at a sevenyear low with 7,659 sales, according to real estate data firm CoreLogic.

The median price was up 12.2 percent year over year to $830,000 in August, but down month-overmonth by 2.4 percent. Prices have dropped in the past few months after hitting a record high in June and May of $875,000, but remained about $1 million in Marin, San Francisco, San Mateo and Santa Clara counties. The median home price in San Francisco, $1.31 million, was up slightly from July to August.

The drop across the region is the latest sign of a slowdown in the red-hot Bay Area housing market, which has been bolstered by surging tech job growth and little construction. But rising home prices have outpaced salary growth, making it harder for residents to afford homes. Rising interest rates will also make it harder to

buy, according to CoreLogic, but inventory is expected to increase in September.

“Much of the recent slowdown can be attributed to the lack of affordable inventory on the market. Unlike the frenzied market of the mid-2000s, many struggling to buy today don’t have the option to stretch financially with the sort of subprime and other risky financing that fueled a lot of homebuying late in the last cycle,” Andrew LePage, a CoreLogic analyst, said in a statement.

In the past 30 years, home sales have risen by an average of 2.3 percent in August.

New home sales, including condos, were down 40.7 percent the historic average.

The 30-year, fixed-rate mortgage rose to 4.72 percent this year, a seven-year high, according to Freddie Mac. The Federal Reserve also raised the benchmark interest rate to between 2 and 2.25 percent in the third increase this year.

“Waning affordability reflects price hikes and a significant rise in mortgage interest rates this year,” LePage said. “While the Bay Area’s median sale price rose about 12 percent year over year in August, the monthly mortgage payment on the median-priced home jumped 21.5 percent due to a roughly 0.7-percentage-point gain in mortgage rates over that period.”