Bay Area home sales rebound in October after mortgage rates drop to two-year low

After a sluggish September, Bay Area home sales rebounded in October after mortgage rates dropped to their lowest level in two years.

The average rate for the 30-year-fixed mortgage rate fell slowly through the end of the summer, hitting 6.08% at the end of September, according to Freddie Mac. The lower rates motivated some buyers to jump back into the market, boosting October sales 20% from a month earlier, and 16.2% from October 2023, according to new data from the California Association of Realtors.

“People have been waiting for this, and they figured that the rates might not come down again,” Berkeley real estate agent Geri Stern said. “They wanted to jump on those rates while they could.”

The relief in rates was momentary — since the end of September, rates have climbed back to 6.84%.

The median sales price of a single-family home in the nine-county Bay Area also ticked up 3.6% from last October, reaching $1.3 million. The median price reached $2 million in San Mateo County, $1.99 million in Santa Clara County, $1.75 million in San Francisco, $1.27 in Alameda County, and $869,500 in Contra Costa County.

While prices have risen for single-family homes, buyers can still find deals, especially for houses that have sat on the market for over a month.

Emeryville renter Barbara McDonald started looking into buying this fall after her landlord told her he intended to sell her building. The 58-year-old graphic designer and sign-marker found a two-bedroom condo in West Oakland listed for $589,000 that hit everything on her wishlist — it was modern, spacious enough to host friends and came with good parking.

Though she missed the open house, it may have been for the best — the following Monday, the seller dropped the price by $70,000. She made an offer at $525,000, beating out one other bidder. She expects to close the deal later this week.

“I was sweating it, for sure,” McDonald said. She was also happy to realize that, with her 20% down payment and a 7.5% interest rate, her monthly mortgage payment is about the same as what she paid in rent, about $4,000.

“I didn’t get a great interest rate, but that is a short-term problem,” McDonald said. She plans to refinance if rates fall, in which case her mortgage payment would be less than what she paid in rent.

Despite a string of cuts to the interest rate by the Federal Reserve this fall — a half-point cut in September, followed by a quarter point in November — mortgage rates have continued to climb. That’s because rates tend to move in anticipation of future Federal Reserve moves, rather than in reaction to them.

“The rates are still high for what we’re used to,” said Mara McCain, a broker with The Agency in Woodside. “We got spoiled with the 3% and 4% rates.”

While agents expect that the higher rates could lead to slower sales activity toward the end of this year, they say that won’t be the case for the Bay Area’s luxury buyers, who may have seen their purchasing power go up after stocks and Bitcoin both rallied after Donald Trump won the presidential election.

“A lot of people make their down payments with stock, and that really affects our market,” McCain said.

It’s a different picture at the lower end of the market, agents say.

“There are a lot of homes sitting on the market, and they’ve had to reduce their prices,” Stern said. “Homes aren’t moving unless they’re priced really attractively.”

Single-family homes in the Bay Area spent a median of 18 days on the market this October, compared to 16 days last year.

Grant Inaba, an Oakland agent who sells East Bay properties typically priced less than $1 million, has had to work with sellers to readjust their expectations.

“I had one seller who was anticipating he could sell his home in two weeks,” Inaba said. “We had to tell him to expect four weeks — properties are taking longer to sell. It’s not an easy slam dunk.”

Mavis Delacroix, an agent with Compass in Piedmont, said that she expects to see more activity once interest rates drop closer to 5%.

“Right now, consumers are underwhelmed by the interest rates,” she said. “When you have someone who refinanced their house at 3.5% and they have to buy at 6%, they don’t want to move.” She has one client who wants to downsize from her existing home, but due to high interest rates, would pay the same monthly payment for a smaller house.

“It just doesn’t make sense — why would you pay the same for less square footage?” she asked.

In a positive sign for 2025, inventory across the Bay Area increased from last year, rising to 1,570 active listings from 1,183 in the San Jose-Sunnyvale metro area and to 6,140 listings from 5,053 listings in the San Francisco-Oakland metro, according to Realtor.com.

Though there may be fewer choices right now, agents say that the end of the year can be a good time to buy, since sellers listing now typically are doing so because they need to move, not because they want to. Plus, buyers can take advantage of reduced competition around the holiday season.

“In January, all the buyers come out to buy a house for their New Year’s resolution, and then they drive up prices again,” Stern said. “It’s just a function of the calendar.”