San Diego County’s resale home price dropped in May and may be the first sign of a cooling housing market.

The resale single-family home price was $940,000, a $10,000 drop from the previous month, said CoreLogic/DQNews on Wednesday. This is the first time in 2022 that the resale home price has gone down, and is part of a slight slowdown seen across Southern California.

It comes as the number of homes with a price reduction is starting to rise across San Diego County. While rising mortgage rates are typically seen as the biggest reason for a cooldown, it hasn’t meant much yet for final sale prices. The overall median home price in San Diego County — a combination of new and resale condos, townhouses and single-family homes — was $850,000, a record high, surpassing the previous record in April of $840,000, and representing a 17.2% annual increase.

Chris Anderson, board president of the Greater San Diego Association of Realtors, said higher interest rates are slowing the market but not to the level a lot of potential buyers might want to see.

“There has been a bit of cooling with interest rates,” she said. “It has made a difference. But we're still seeing multiple offers.”

The average rate in May for a 30-year, fixed-rate mortgage was 5.23%, its highest monthly average since 2010, said Freddie Mac. It has gone up considerably since, with the average above 6% in June said Mortgage News Daily.

Anderson said a lot of buyers are fed up with high rent prices and are determined to buy. The difference now is their buying power is lower, meaning they are changing what they are searching for to “smaller and older,” she said.

From May 9 to June 5, 6.5% of San Diego County home prices had a price reduction — the highest level in at least four years. At the same time, 62.5% of homes were off the market in two weeks. That’s much lower than a high of 75 percent in February.

Home inventory is also up, but not much in a historic sense, so shopping for a home is still likely to be competitive. There were 3,714 homes for sale in the same time period. While that is up from a low of around 2,000 at the start of the year, it is still reduced from past years. In May 2021, there were 4,176 homes listed for sale; 6,163 in 2020; and 8,875 in 2019.

While the market for resale single-family homes cooled a bit in May, it isn’t the same for all home types. The median for resale condos — the point at which half the homes sold for more and half for less — reached a record high of $663,000 in May, up from the previous record of $655,000 in April.

There were other examples of the home market cooling in Southern California. On a monthly basis, Ventura County’s median was down 2.3 percent to $794,250, and Los Angeles County was down 0.6 percent to $860,000.

The biggest monthly increase, 1.4 percent, was in Riverside County for its median of $598,500; It was followed by San Diego County with a 1.2 percent increase; Orange County up 0.4 percent for a median of $1 million; and San Bernardino County up 0.1 percent for its median of $520,000.

Source: SDuniontribune by Phillip Molnar